Trade Setup for November 4: Nifty heads into a week dominated by global cues with lows in focus

It has been a volatile last two weeks for the Nifty, having ended October on a negative note. The month saw the index fall 6%, marking its worst monthly drop since March 2020. Relentless selling from foreign institutions, who sold in every single session during the month, coupled with earnings disappointments, added to the index’s woes and eroded ₹30 lakh crore worth of investor wealth.

However, Samvat 2081 has begun on a positive note with the index ending higher during the token one-hour Mahurat Trading session on Friday. The start of November also is no-less packed with action as the Indian market participants will have eyes on all four corners of the world due to various cues emerging during the week.

The all important US Presidential Election outcome will be known this week, as will be the US Fed interest rate decision. Consensus still remains that the FOMC will slash rates by 25 basis points after the non-farm payrolls howler on Friday due to Hurricanes and strikes. Manufacturing activity in the US also fell to the lowest level since July 2023.

The four-day National People’s Congress (NPC) also begins in China from Monday and will go on even after the Presidential election outcome in the US. The anticipation of another major stimulus announcement from the NPC has also begun doing the rounds and is adding to the uncertainty and volatility.

Additionally, geopolitical tensions remain on the sidelines but continue to lurk around with reports suggesting that Iran me launch a retaliatory strike on Israel from Iraqi territory. The news led to a brief spike in oil prices as well.

Back home, earnings season continues with multiple broader market companies, and big ones at that, reporting results in the upcoming week. Among the Nifty names, stocks like Dr. Reddy’s, Titan, Tata Motors and India’s largest lender State Bank of India, along with the newest index entrant, Trent, will be reporting results this week.

For levels, even as the Nifty closed above the 24,300 mark, last week’s low of 24,134 and the October 25 low of 24,073 continue to be the focal point for the Nifty. The continued rise in US treasury yields, coupled with a stronger US Dollar, may also act as deterrents to any potential recovery in sentiment.

For the Nifty Bank, which turned out to be an outperformer in the week gone by, last week’s high of 52,354 and lows of 51,012 and the October 25 low of 50,382 continue to remain the levels to monitor for the upcoming week.

Samir Arora of Helios Capital during the Mahurat Trading session spoke about the fact that the next six to nine months, it will be good to look at growth companies but auto and consumer stocks may not do well.

“I feel that the longer term, medium term bullishness persists. I do see that we are going to, within 12 months from now challenge and break out to new highs,” said Atul Suri of Marathon Trends. “I still think that before next Diwali, well before next Diwali, we would hit a new high. We would push more towards the 29,000 to 30,000 level. Again, I am not giving any targets, but what I am trying to say is that as an investor, I do see the next 12 months to continue to be rewarding,” he added.

Market veteran Ramesh Damani also highlighted two themes that he would want to focus on for the next Samvat, which were Digital Public Infrastructure and Pharma.

“So, there are maybe half a dozen companies, and they are still trading at fairly modest market caps, not necessarily price to earnings ratio, but modest caps and compared to the opportunity that I see ahead for them, these companies are buy. So, whether it could be e-KYC (electronic know your customer), it could be PAN, it could be Aadhaar or Open Network for Digital Commerce (ONDC), enormous opportunities in front of these companies and some of these companies will prove to be great winners over the next three to five years,” Damani said.

What Are The F&O Cues Indicating?

The truncated session saw these stocks add fresh long positions, meaning an increase in both price and Open Interest:

Fresh short positions were seen in these stocks during the truncated session, meaning a decline in price but an increase in Open Interest:

These are the stocks to watch out for ahead of Monday’s trading session. Some of these announcements came before the Mahurat Trading session on Friday:

• NCC: Won total orders worth ₹3,496 crore in October from state, central government and private companies.
• Ashoka Buildcon: Won orders worth ₹312 crore from Maharashtra State Electricity Transmission Company.
• MOIL: Cuts price of ore with Manganese Content of 44% and Above by 7% from November 1 and Manganese Content below 44% by 1%
• NBCC: Wins multiple orders worth ₹235 crore from Power Grid, MGKVP and SSVV Varanasi.
• NMDC: Production up 4% in October to 4.07 MT. Sales up 17% in October to 4.03 MT.
• Premier Energies: Arm Premier Energies International & Premier Energies Photovoltaic bags multiple orders worth ₹560 crore.
• Zen Technologies: Net profit at ₹62.6 crore from ₹15.3 crore last year. Revenue at ₹241.8 crore from ₹66.5 crore last year. EBITDA up to ₹80 crore from ₹19 crore last year. EBITDA margin at 33.1% from 28.4% last year. Current order book at ₹956.7 crore.
• Sun Pharma: US District Court of New Jersey grants preliminary injunction delaying the launch of LEQSELVI. The company is stopped from launching LEQSELVI until a subsequent favourable court decision. Stopped from launching LEQSELVITM until expiry of patent or lawsuit, whichever is earlier. LEQSELVI is used to treat severe Alopecia Areata.
• Lokesh Machines: Exporting machines to Russia since 2011. Not aware of name appearing on US Sanctions list. None of the company’s distributors feature on any sanction list.
• Apollo Hospitals: Enters into a definitive build & operate 500-bed hospitals in Worli with an investment of ₹130 crore. To expand its existing hospitals facility in Lucknow to 500 beds from the present 300 beds with an investment of ₹325 crore.