The bull run was supported by sustained domestic mutual fund inflows, foreign capital inflows, better-than-expected economic growth, and robust corporate earnings. D-Street investors added a significant 81.90 lakh crore to their wealth in 2023 powered by a stellar rally in stocks.

On the last trading session of 2023, the Nifty 50 settled at 21,731.40 and Sensex closed at 72,240.26, snapping their five-day winning streak, on profit-booking in select heavyweights even as the mid and smallcap indices ended with healthy gains. After a five-day winning run, selling pressure emerged in energy, banking and IT counters on Friday, which dragged indices lower, said traders. 

Also Read: At 15% upside, Nifty 50 to claim 25,000 by Dec 2024? Here’s why analysts are bullish on Indian markets

In its derivatives, monthly rollover report, domestic brokerage firm Religare Broking revealed Nifty closed at around 21,780 after Volume weighted average price (VWAP) based buying activity was witnessed in the second half of the day.

In its report, Religare highlighted that at 95 per cent, cement and chemicals are the sectors where the highest rollovers were witnessed in the December series. Whereas at 89 per cent, finance is the sector where the lowest rollover was witnessed.

Nifty, Bank Nifty derivates summary

Nifty futures has rolled at around 80 per cent compared to 73 per cent which is higher with respect to the previous series. The open interest for the new contract is also higher by around 29 lakhs with respect to to the last month contract implying fresh long positions. Bank Nifty futures rolled at 81 per cent compared to 80 per cent, in-line with the previous month. 

Bank Nifty futures have seen lesser open interest of around 4 lakh with respect to the last month which might be because of the short covering rally seen in the index during the December expiry. Bank Nifty had marginally outperformed the Nifty in December, and the brokerage believes that this might not continue in January.
 

Which stocks to invest in January series as per Religare Broking?

Apollo Tyres, IEX, Exide Industries, and Crompton Greaves are the top picks for the January series, according to Religare Broking.
 

Apollo Tyres (CMP: 446): 

The stock has risen by around three per cent expiry to expiry while adding a significant 40 per cent open interest which is rolled at a good 88 per cent. ‘’With good cash delivery, we expect the stock to continue higher towards the 480 levels,” said Religare Broking.
 

Crompton Greaves (CMP: 299): 

‘’We expect the stock to do well this series due to its exceptional rolls at 99 per cent and the stock adding additional 38 per cent open interest with around five per cent rise in price. Look to Buy towards the 290 levels for a target of around 330,” said the brokerage.
 

Exide Industries (CMP: 307): 

The stock has witnessed strong support near the 290 levels and managed to rise by eight per cent with a rise in open interest rolled at a healthy 91 per cent. ‘’Holding 290 levels, we believe the stock to poised to continue trading with a positive bias,” said Religare Broking.
 

IEX (CMP: 167): 

Moving out from its multi-month range with higher derivative activity (open interest +28 per cent) and a rise of 12 per cent in price since the last month with rolls at 95 per cent. ‘’The stock is likely to march towards the 190 levels while keeping 165 as a support,” said the brokerage.

Also Read: New Year Stock Picks: Religare Broking lists Asian Paints, Eicher Motors among 5 top picks for 2024

Outlook for January

Nifty January Futures contract open interest started with around 128 lakh compared to 99 lakh in December. Bank Nifty January futures have seen an open interest of around 20.8 lakh compared to 24.9 lakh in December.

The highest Nifty January monthly options open interest is at 21,500 PE and 22,000 CE. Nifty 22,000 call open interest stands at around 46,000 contracts and 21,500 put open interest at around 41,000 contracts. 

‘’At expiry, VIX was at around 15 per cent levels implying around 850 odd points swing in the Nifty in the next 30 days,” said Religare Broking.

The brokerage believes metal, oil and gas and chemicals are the sectors that can outperform the index in January series. 

Foreign institutional investors (FIIs) have bought around 30, 5000 crore in cash market for the December month. FIIs long ratio is now at 70 per cent compared to 36 per cent previously in index futures implying more of fresh long positions into the January series.

Technical View: Long rolls was seen majorly in January series. For January futures with an average price of around 21,650 which becomes a pivot for the month. Till the time Nifty trades above 21,650, the index is in a ‘buy on dips mode’ for the first weekly expiry.

Also Read: Midcaps in Review | From REC to Oil India, here are the top 10 midcap gainers of 2023; check full list

‘’We expect the Nifty to find strong support at 21,600-21,500 levels for January series. On spot basis 22,100-21,400 might be the range for Nifty for first fortnight of January series,” said Religare Broking.

Ratio wise (Bank Nifty/Nifty) has a resistance at 2.27 and support at 2.20. The ratio between Bank Nifty and Nifty currently at around 2.22. The major support for Bank Nifty would be around 46,500 levels. We expect Bank Nifty to be in 46,500-49,500 levels for the first fortnight of January series.

On the outlook for Nifty 50, Ajit Mishra, SVP – Technical Research, Religare Broking Ltd said, ‘’We may see further consolidation in the index and it would be healthy after the recent surge.

We expect Nifty to hold the 21,300-21,500 zone in case of a dip during consolidation and reiterate our positional target of 22,150 level. Participants should stay focused on the selection of stocks and prefer index majors.”

Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 30 Dec 2023, 04:12 PM IST

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