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Santa rally to take Nifty50 near 19,000 in December F&O series

The bulls slammed the bears on Dalal Street and this turned the November derivative series into a stupendous one for Indian equities.

The strong positioning of foreign portfolio investors (FPIs) and high-net worth individuals (HNIs) now gives the confidence of Nifty50 scaling a fresh record high and testing 18,900-18,950 levels in the December derivative series, analysts said.

In the November series, Nifty50 gained over 4% and scaled a 52-week high. From its September lows, Nifty50 is up about 10% and it is all set to add more goodies into the kitty.

On Friday, the 50-stock index was trading at 18481.20 points, flat from the previous close.

“Going into the December series, we will stick to our bullish stance, eyeing all-time highs. Our Nifty target for December series will be 18,900,” Sriram Velayudhan, derivatives analyst at

said in a report.

The aggression to rollover long positions to the December series was visible, as the rollover cost inched up to 80 basis points on Thursday, when the November series expired, from 57 bps the previous day.

Interestingly, the rollover cost for SGX Nifty50 futures at 91 bps, is higher than that for Nifty50. Historically, the rollover costs for SGX Nifty50 have traded at a discount due to the differential charges between India and offshore.

This indicates that FPIs may now be aiming for a breakout in Nifty50 from all-time high of 18,600 recorded in mid-October last year, IIFL Securities said.

At the start of the December series, FPIs were net long of 8,79,500 contracts in index futures, compared with 2,32,800 contracts at the start of November series.

In stock futures as well, FPIs were net long by 13,63,300 contracts, compared with 11,73,700 contracts at the start of November series, the rollover data showed.

“The current positioning can take Nifty50 to 18,950 levels, however, crossing that will be a challenge until we see the revival in broader markets,” Nuvama Wealth Management said in its report. “Our stance is that the markets should see an immediate bump, and then should consolidate with sectoral rotation.”

In case, Nifty slips to 18,150 levels in the current month series, Nuvama Wealth recommends buying at around that level, maintaining a stop loss at 17,900.

Historical performance of equities in the December series also suggests that the market has given positive returns in this month.

The seasonality trend of the last 20 years for the month of December based on empirical evidence shows Nifty having an 80% probability of closing in the green, IIFL Securities said.

Out of all the months, December has also given the highest average monthly returns of 3.2%.

Nuvama Wealth’s analysis shows that Nifty50 has given higher returns than the Dow Jones index in seven out of the last 10 years.

This shows that Dalal Street is all set to see a Santa Rally and bid goodbye to the rollercoaster 2022 on a positive note.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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