Nifty would probably hit close to 19,000 in December expiry, according to aggressive rollover

Even though the Nifty index had a sluggish start to the new series, technical analysts predict that the index will move closer to the 19,000 level by the end of the series and so reach a new top.

Aggressive long rollovers from prior series to the December series were evident in the Nifty and Nifty Bank. This indicates that traders who had previously taken a bullish posture have kept it and are rolling over their bets into the following month's contract as well.

In comparison to the previous month, rollovers for Nifty and Nifty Bank were 82 percent and 88 percent, respectively. Foreign institutional investors (FIIs) reduced their stock futures positions but continued to be net buys on index futures.

"We will maintain our bullish posture going into the December series, aiming for all-time highs. Our Nifty target for the December series will be 18,900, with a key support level set at 18,100, according to IIFL Securities analyst Sriram Velayudhan.

According to the 20-year trend for the month of December, there is an 80% chance that the Nifty will end the month in the black. Out of all the months during this study period, December also provided the highest average monthly gains of about 3.2 percent.

Currently, Nifty is trading very near its all-time high of 18,604. Analysts predict that since the Sensex has reached a new high, the Nifty will likely follow suit. Only 18 of the Nifty50 stocks have been able to outperform the index's returns, despite the fact that the index has risen around 10% from its September lows. This skew in constituent performance is an indication of very stock-specific participation in the current surge.

Amit Trivedi, Senior Derivative Analyst, Yes Securities, stated that "Nifty is likely to complete its pending upward moves and consolidate at the upper band provided support at 18,200 is decisively held."

Sectoral placement

On a sector level, November saw particularly strong performances in IT and metals. Pharma, auto, and real estate all underperformed relatively. Sectoral positioning has been inconsistent, with certain sectors experiencing aggressive rollovers that fueled a bullish atmosphere while others had no increase in rollovers.

"Open interest (value) has become heavier in banking & financials at the beginning of the December series, led by long build-up," said Velayudhan. "IT is lighter and has a metal foundation than OI. IT, in our opinion, will be a fascinating area to keep an eye on in the December series because a light OI base will give the stocks ammunition to fire.

With Zee Entertainment and Sun TV, two of the biggest media corporations, experiencing short build-ups and lengthy unwinding, respectively, the media industry had increased rollover. This pattern points to underperformance and a small window of opportunity for growth.

With increased rollover and OI addition, auto index members like Eicher Motors ended lower. Major upside is therefore improbable because the recent underperformance is probably going to continue, Trivedi noted. JK Cement and Dalmia Cement both gained over 10% in the cement sector, with rollover over 90%. Trivedi suggested that now would be a good time to invest.

Meanwhile, there was a brief buildup in textile stock prices.