After sharp Nov recovery, mkt may consolidate before next leg up
Supported by strong renewed buying from FIIs, lower crude oil prices and decent Q2 results from majority of the corporates; Nifty and Sensex sustained higher levels and remained stable all through the week ended.
Nifty ended the week at 25,144.30 (recording a weekly gain of 0.27 per cent), and the Sensex closed at 81,592.45 (recording a weekly gain of 0.33 per cent). Sharp gains in Nifty Midcap 100 finishing the week with a strong cumulative surge of 3.6 per cent. at 61,889 and Nifty Smallcap 100 closing at 19,656.45 wrapping up the week with an overall gain of 2.1 per cent showcase the heightened activity in the broader market.
FIIs have pumped a net Rs 76,188.75 crore into equities in November so far, marking a sharp turnaround after two consecutive months of heavy selling. The turnaround follows net equity outflows of Rs 70,704 crore in September and October. The return of foreign investors has also been supported by a shift in global investment sentiment.
The sell-off in artificial intelligence-linked stocks in the US and other Asian markets, has made India seen as a relatively less AI-exposed market more attractive to foreign investors. Following media reports that Securities and Exchange Board of India (SEBI) has recommended that the government scrap the 12.5 percent long-term capital gains (LTCG) tax on equity investments by foreign portfolio investors as part of its pre-Budget proposals; expectations of a possible reduction in the tax burden on foreign investors may have contributed to the improvement in sentiment.
Following the latest CPI inflation data, a rate hike by the Reserve Bank of India (RBI) in December cannot be entirely ruled out. However, falling international crude oil reduces the probability of aggressive monetary tightening, but sustained moderation in food and core inflation is essential before the RBI turns more accommodative. Corporate earnings have held up well despite challenging macroeconomic conditions.
India Inc’s Q2FY27 results point to strong revenue and profit growth despite continued global upheaval, technological disruptions and supply chain volatility. Stronger foreign portfolio inflows, sustained earnings momentum and a weaker dollar could support further gains in Indian equities, even as geopolitical risks and inflation remain concerns.
After the sharp November recovery, some consolidation can be expected before a further rise. A sustainable breakout will require earnings upgrades and broader market participation rather than merely liquidity-driven valuation expansion. Indian equities could end 2026 at a record high, with the market rally extending beyond large-cap stocks say some observers.
Lessons from Nvidia imbroglio: Nvidia is worth perhaps $500bn less than it was at the end of last week, which ranks this among the costliest corporate crises of all time. (The sum is greater still when you consider that the rest of the market is up.) First, tech firms & markets must recognise that founder premium comes with founder risk. Second, it illustrates a three-fold concentration risk: the danger of a stock market which depends on one technology, which depends on one firm, which depends on one man. Third, governments must find a way to protect their AI tech without surveilling private lives of key players. Never has the stock market depended on so few people so unaccustomed to being playboys. A great scandal is like a sponge, soaking up everything around it.
That is a testament to the fact that investing without education and research will ultimately lead to regrettable investment decisions. Research is much more than just listening to popular opinion.
FUTURES & OPTIONS / SECTOR WATCH
Consolidating the gains of the first week of month, market closed the week ended on a positive note. Renewed buying interest from FIIs and a correction in crude oil prices were the triggers. On a weekly basis, the Nifty gained over half a percent, while the Bank Nifty outperformed significantly, registering gains of more than 3.5 per cent. PSU Banks and Realty emerged as the major gainers; while IT, Cement and Commodities were laggards. In the options segment, significant Call open interest in Nifty was observed at the 25,500 and 25,200 levels while major Put open interest was concentrated at 25,000 and 25,100 strikes. In Bank Nifty, substantial Call open interest was seen at 60,000, while significant Put open interest was concentrated at 61,000 highlighting these levels as important resistance and support zones respectively. Implied volatility (IV) for Nifty’s Call options settled at 13.65 per cent while Put options concluded at 14.95 per cent. The India VIX, a key indicator of market volatility concluded the week at 16.62 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 1.17 for the week. The momentum indicators remain bullish, although the RSI at 75 suggests the market is entering an overbought zone which may trigger some consolidation or profit booking. The levels of 25,425 and 25,550 are likely to act as immediate resistance points. On the lower side, supports are expected at 24,850 and 24,600. With the Nifty closer to a significant resistance area, a cautiously optimistic but disciplined approach should be adopted. Avoid indiscriminate fresh purchases at higher levels and hold existing positions with appropriate trailing stop-losses. Fresh exposures should preferably be restricted to stocks displaying strong relative strength and strong technical setups.
Stocks looking good Asian Paints, Ashok Leyland, Coromandel, Karur Vysya Bank Prestige and Siemens. Stocks looking weak are Alkem, Bharat Forge, Jubilant Food, Page Inds, Mannapuram and OIL.
(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)
Ramkrishna Forgings Limited
The company is primarily engaged in the manufacturing and sale of forged components of automobiles, railway wagons and coach and engineering parts. The company operates through two segments: Forging components and Others. The Forging components segment produces and sells forged products comprising forgings and machined automobile components. Others primarily include services for tours and travel, sanitization and cargo business. Its automotive components include front axle, engine, suspension and chassis, transmission and rear axle. It also manufactures critical components for the tractor and farm equipment industry. It is also engaged in supplying undercarriage and safety critical parts like screw coupling and hangers for bogie bolsters for conventional coaches. The company’s facilities boast advanced production and quality control technologies, allowing it to readily meet the stringent quality demands of Original Equipment Manufacturers (OEMs) and Tier -1customers in India and abroad. Its ability to manufacture tailored products has broadened its product range and expanded its potential market. This capability has fostered strong partnerships with Tier-1 suppliers in the United States and OEMs in Europe. The company has a capability to manufacture components through cold forging, warm forging and hot forgings and has also made foray into castings. Buy on declines for a target price of Rs1200.