FIIs' behavior along with inflation numbers from US and China will remain key factors for the next week.
After an extended weekend, Indian markets are likely to start a fresh week with a positive note on the global backdrop. However there is a risk of selling pressure at higher levels as we are underperforming the global peers where the near term texture has changed to 'sell on rise' from 'buy on dip'.
Markets will remain busy dealing with global macro numbers where US inflation numbers that are scheduled on 10th November will be the most critical one whereas China will also announce its inflation numbers on the same day.
On the domestic front, we will have our IIP numbers on November 12. FIIs' behavior will be the most critical element from here, because they are selling continuously and if they stick with their current mood then we can expect that correction can see the further extension.
Stock-specific movement will be seen as the market is heading for the last batch of Q2 earnings where Muthoot finance, Sun TB, Divis Lab, Aurobindo Pharma, Britannia, and M&M are among the key numbers.
If we talk about the derivative data then FIIs' long exposure in the index future stands at 53 percent whereas Put call ratio is trading at the 1.08 mark that is neutral for the market.
If we look at the OI distribution for November 11, expiry then it is very wide between 17,000-18,000; however, 18,000 is immediate and strong resistance.
Technically, Nifty is respecting its 50-DMA. However, the near-term texture is weak where 18,000-18,200 is a critical resistance area where we can again see selling pressure. If Nifty manages to take out this zone, then we can say that correction has ended and the market is ready for fresh expansion.
On the downside, if Nifty slips below its rising 50-DMA, that may coincide with the 17,700 level; then we can expect further weakness towards the 17,450-17,250 zone.
Bank Nifty is trying to respect its 20-DMA on a closing basis; however, 40,500-41,000 is a critical supply zone at any pullback and if it manages to sustain above 41,000 level then it may again start to show strong bullish momentum. On the downside, 39,000 is immediate support while 38,500 will remain sacrosanct support.
In terms of sector, FMCG and Auto stocks are looking better placed to outperform next week, while some of the shipping and textile companies may also do well on the back of technical strength.
(Santosh Meena is Head (Research) at Swastika Investmart)
