October turned out to be the worst F&O series for the Nifty 50 in 2023. The index fell nearly 700 points during the series, most of which has come during this recent six-day fall. Not only has October been the worst F&O series for the index, it is also set to report its worst week of the year so far. As of closing on Thursday, the Nifty 50 is down 3.5%, which, so far, is its worst week since June 2022.

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The weekly options expiry session brought no relief whatsoever for the Nifty 50 as every attempt at a rebound was sold into. The index closed at its lowest level since June this year and below key support levels as well. From the September 15 peak of 20,222, the Nifty 50 is down nearly 1,400 points. Half of that drop has come courtesy of the heavyweights - HDFC Bank, Reliance Industries, ICICI Bank and Infosys.

Nine out of the last 10 trading sessions for the Nifty have resulted in losses. The pain over the last six sessions has left the investors poorer by ₹18 lakh crore. Some pockets within the broader markets did see a recovery towards the close of trade such as railways and shipbuilders and had it not been for that recovery, the market cap erosion at one point was well above ₹20 lakh crore.

What Are The Experts Saying?

"The fall in markets got created with the excesses in the small and midcap space. As the correction in that set in, it just happened to be a bit of a domino effect. So with international cues being particularly unfavourable, a fair amount of overhang of that is coming through. I think at these levels we may have pretty much played out for the moment. I think the markets are not just oversold in the short term but the fact that money will now come in and come into largecaps is the way I see things moving forward," N Jayakumar of Prime Securities said.

"It would be advisable to be more in large-caps for the reason that relatively large-caps have become cheaper versus small and mid-caps. In our portfolios, also, I must have mentioned over the last two-three months, we have been taking some monies off the table in in small and mid-caps and parking those monies in large-caps for the reason that I just mentioned. Just be in the near term, a little cautious on this volatility," Anshul Saigal of Kotak PMS said.

What Are The Nifty Charts Indicating?

"This is one level from where you can at least get a bounce. But a bounce might end up being a dead cat bounce. So give it a few days, you can get a pullback," Rohit Srivastava of indiacharts.com said. "But once again, I would not be surprised if there's further selling. If we break this then we head towards 18,100 that will end up being a 61% retracement of the entire rally that we've seen from the March bottom," he added.

Nagaraj Shetti of HDFC Securities maintained that the short-term trend of the Nifty 50 remains negative, although an oversold setup may trigger an upside bounce. However, a decisive move below levels of 18,800 can open downsid possibilities of 18,500 - 18,600 on the Nifty 50 in the near-term.

As long as the Nifty 50 continues to trade below the 19,000 mark, the weak sentiment is likely to continue towards levels of 18,800 - 18,725, according to Shrikant Chouhan of Kotak Securities. He only expects a relief rally towards 19,150 levels in case the index sustains above the 19,000 mark.

Six-Day Drop For The Nifty Bank

The Nifty Bank is now down 4,000 points from its recent high of 46,310. The index also fell another 550 points on Thursday, taking its six-day fall to well over 2,000 points. For the week, the Nifty Bank is down 3.3%, which is the third worst drop it has had in a week in 2023 so far.

Kunal Shah of LKP Securities said that the undertone remains bearish for the Nifty Bank till it remains below its 200-Day Exponential Moving Average of 43,264. The next immediate support for the index is at 42,000 where put writing has been seen. "A breach below this level can lead to further declines towards 41,500 - 41,200 range," he said.

Shetti of HDFC Securities said that there are no clear cut reversal signs on the Nifty Bank just yet. Therefore, 41,800 - 41,600 is likely to be the next support for the index. "I am little doubtful whether we could see some significant upside bounces from the lows. Because the overall trend structure of the market from the smaller to larger timeframe including Bank Nifty has damaged and turned into negative," he said.

Asian Paints Volume Growth Disappoints

Asian Paints shares ended at the lowest point of the day, declining 3.6% after the company's volume growth for the September quarter missed estimates. Volumes grew 6%, compared to expectations of 8%-9%. The volume miss also led to the company's topline missing street expectations. You can read more here.

"The kind of expectation that one really had in terms of reasonable volume growth coming through aided by price as well I think both these elements are probably missing at this juncture," Mayuresh Joshi of William O'Neil. "I think a reasonably soft set along with soft commentary is probably what is dampening the stock and the underperformance might continue," he added.

What Are The F&O Cues Indicating?

Nifty 50's November futures added 52.6% or 37.9 lakh shares in Open Interest on Thursday. They are currently trading at a premium of 115.35 points. On the other hand, Nifty Bank's November futures added 68.5% or 9.6 lakh shares in Open Interest. Nifty 50's Put-Call Ratio is currently at 0.82 from 0.67 earlier.

No stocks are currently in the F&O ban list, which means both Delta Corp and RBL Bank are out of the ban.

Nifty 50 on the Call side for November 2 expiry:

For next Thursday's weekly options expiry, the Nifty 50 call strikes of 18,900 and 19,000 have seen significant Open Interest addition. However, the 21,000 call strike has seen the maximum Open Interest addition for next week's expiry.

Nifty 50 on the Put side for November 2 expiry:

On the downside, the Nifty 50 strikes between 17,600 and 18,000 have seen Open Interest addition for next Thursday's expiry. The 18,800 put strike has also seen some addition in Open Interest.

On the final day of the October F&O series, here are the stocks that saw short covering, meaning a decrease in Open Interest but an increase in price:

These stocks saw unwinding of long positions on Thursday, meaning a decrease in both price and Open Interest:

Here are the stocks to watch out for ahead of Friday's trading sessions:

Vodafone Idea: Net loss widens to Rs 8,737.9 crore from Rs 7,840 crore compared to the June quarter. Revenue remains flat sequentially at Rs 10,716.3 crore. EBITDA margin expands 100 basis points, while Average Revenue per User (ARPU) rises by 2.1% to Rs 142.

Dixon Technologies: Net profit rises 47.1% from last year, while Revenue up 27.8%. EBITDA margin expands by 20 basis points. Most numbers were in-line with expectations from a CNBC-TV18 poll.

Colgate: Net profit rises 22.3%, while revenue grows by 6.1% from last year. EBITDA margin expands by 340 basis points. The company also declared an interim divdend of Rs 22.

RailTel Corp: Net profit up 23.6% year-on-year, while revenue grows by nearly 40%. EBITDA margin narrows to 19.2% from 23.4% year-on-year.

Karnataka Bank: To issue shares worth Rs 800 crore on a preferential basis to HDFC Life, Bajaj Allianz, Quant MF, Bharti AXA, Bajaj Allianz GIC at Rs 239.52 per share.

Novartis India: Company says it is currently facing shortage of one of its product 'Simulect 20 mg.' The company said it is putting its best efforts to mitigate the supply issue on a sustainable basis.

What Do The Global Cues Indicate?

Markets in the Asia-Pacific are attempting a rebound on the final trading day of the week as investors continue to digest more inflation data.

The Nikkei 225 and the Topix have opened with gains of 0.6% each, while the Kospi in South Korea is up 0.2% in opening trade. However, the Kosdaq has slipped taking overnight cues from Wall Street's Nasdaq.

Futures on the Hang Seng are also pointing towards a positive start to the trading session.

Overnight, US indices fell further with the Nasdaq plunging into correction territory. The index closed below its 200-Day Moving Average, courtesy of Thursday's drop. The S&P 500 fell 1.2%, while the Dow Jones fell nearly 250 points.

Foreign investors were heavy sellers in the cash market on Friday, while the domestic investors were net buyers.

First Published:Oct 26, 2023 10:02 PM IST