Where Are We?
Some key stocks have surpassed previous life- highs. Technically, this is a major shift in the larger trend of the markets and behaviourally sentiment levels have been revived significantly. This could possibly be the start of a new bull run where the next 12-18 months can be highly rewarding. Markets are hugely driven by sentiment and this ship has definitely turned.
What is in Store?
After the stupendous rally, the Nifty seems to have taken a breather and has formed a Bullish Flag pattern on daily charts. Flag patterns are primarily continuation patterns formed after a sharp price move. The breakout level of the flag is placed at 11695 on the spot above which one can expect the previous level of 12000/12100 to be tested in the current month. On the derivatives side, Bank Nifty futures’ open interest is at an eight-year low owing to low rollovers (57.62 per cent). This is indicating that the Bank Nifty is very light on positions and any fresh long buildup at a low base can give another big directional up-move. The rollover in Nifty stood at 73.08 per cent, which is slightly below its quarterly average of 74.28 per cent. However, the open interest decreased by 14.11 per cent on expiry-to-expiry basis, which indicates that most of the positions formed in September didn’t get rolled to the October series.
What Could the Investor Do?
The Nifty is expected to carry forward the momentum into the month of October where the market will be taking cues from various announcements from the finance minister, the RBI monetary policy and the quarterly results. We advise buying 11800 Calls of Nifty October monthly expiry for an up-side potential of 12000/12100. Expect fresh buying above 11700 levels whereas downside supports are placed at 11400 and 11275. The Bank Nifty too can be bought for an up-side target of 31500. Stock specific, we remain bullish on RILNSE 1.77 %, Bajaj FinanceNSE -0.28 % and Tata Global Beverages.