Consolidation can be seen in coming week..

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Market took a pause after witnessing a sharp rally. Nifty lost 1.4% and Sensex lost 1.5% in last week. While Midcap & Smallcap index lost 1.2% and 0.2% respectively. Delay in US stimulus and adjournment of SC verdict on moratorium changed market sentiment and made market nervous. All eyes will remain on second quarter earnings season which has been started from last week; markets are expected to witness a sectorial rotation and are likely to trade in a narrow range. FIIs were net buyers during entire week bought equities worth 1,185 crore whereas DIIs sold equities worth 5,217 crore, FIIs continued to be net buyers in October which could be one of supporting factors for the market. Market may remain range bound till the US presidential elections in the first week of November. The increasing recovery rate and fall in the active case count below 8 lakh mark after one-and-half-month continued to support the market, India reported more than 75 lakh infections, which includes 1.13 Lac deaths while recovery rate stands at 88%. Several vaccines are at Phase 2 and Phase 3 of clinical trials, hopeful for the vaccine in the first quarter of 2021.

Key factors for the week:

• Covid 19 pandemic remains a key factor to watch out for in the coming weeks.

• Equitas Small Finance Bank will open its initial public offering for subscription for three days on October 20, with a price band at Rs 32-33 per share.

• The September quarter earnings remain a key to watch out for as 171 companies will declare their quarterly scorecard in the coming week. Important amongst them to watch out for would be Hindustan Unilever, Asian Paints, Bajaj Auto, ACC, Nestle India, Britannia Industries, Yes Bank, Tech Mahindra, HDFC Life Insurance Company, L&T Technology Services, Bajaj Finserv, Bajaj Finance, Colgate-Palmolive, UltraTech Cement, Biocon, HDFC Asset Management Company, L&T Finance Holdings, SBI Cards and Payment Services, ICICI Lombard General Insurance Company, Persistent Systems etc.

Technical View:

Short to medium term trend remains positive but in the near term there could be some consolidation given the consistent run-up in equities and due to Aug F&O expiry. If Nifty sustains 11,500 levels then we may see rally towards 11,700 and 11,800. As long as Nifty trades above 11,650 levels, we can expect a pullback towards 11,900-12,000 levels. If Nifty slips below 11,650 then 11,500 can be seen in coming week. Option data indicated that the Nifty could remain in a broader range of 11,600 – 12,000 in the coming week, while the volatility is expected to increase in coming weeks ahead of US presidential elections in November. The maximum Put open interest at 11,700 followed by 11,500 strike and is also likely to act as a major support in the coming week. Maximum call open interest at 12,000 followed by 11,900 and 11,800 which will act as major resistance. Nifty could trade in the range between 11,650-12,000. Move above 11,800 could pull Nifty towards 12,000. India VIX reached to 21.64 levels during the last week, India VIX could not go beyond 24 which will not be favourable for bulls.