F&O Expiry Next Week; What To Expect In Indian Stock Market?

This week, the stock market experienced significant fluctuations due to the US elections and the Federal Reserve's policy meeting. These events led to notable market movements, especially during the weekly expiry on Thursday. On the first day of the November series expiry, a sharp correction occurred. Earlier, on Wednesday, Donald Trump's victory in the US election was celebrated, but the FOMC factor dominated, causing Sensex and Nifty to drop by over 1%.

Heavy selling was observed on Thursday, with major indices falling by 1-2%. The Sensex dropped 865 points to 79,500, while Nifty fell 284 points, closing below 24,200. On November 7, widespread selling was recorded. According to depository data, foreign institutional investors (FIIs) sold shares worth ₹4889 crore on Thursday. This adds to approximately ₹2.79 lakh crore sold in 2024 so far. Domestic institutional investors (DIIs) also sold shares worth ₹1787 crore.

Chandan Taparia from Motilal Oswal Financial Services Limited commented on the market's future environment. He noted that Nifty is in a selling mode during rallies, maintaining a selling trend. For the last four trading sessions, Nifty has been trading between 23,800 and 24,500. However, it has not been able to break the resistance of 24,500 on a closing basis.

Taparia highlighted that selling pressure persisted from higher levels throughout the week. The index faces strong resistance near 24,500. A Doji candle formed on the weekly chart suggests uncertainty in the coming days. Meanwhile, there is robust support at 23,800 for Nifty. Taparia mentioned that Nifty is trading below all short-term moving averages. Given the current price action, profit-booking might occur before reaching further support levels.

In a note released after Thursday's market close, Taparia observed a slight increase in the long-short ratio from 22% to 25.85%. FIIs continue to sell in the cash market, indicating ongoing selling pressure. He stated that as long as Nifty remains below the 24,500 zone, selling on rallies will persist. In this scenario, Nifty's target could slip towards the 23,800 zone.

For F&O traders next week, bearish candles on a weekly basis suggest continued pressure ahead. On the options front, the highest call open interest (OI) is at 24,500 followed by 25,000 strikes. Meanwhile, maximum put OI is at 23,000 and then at 24,000 strikes. Call writing is observed at 24,500 followed by 24,200 strikes. Put writing was seen at 24,200 strike followed by 24,000 strike.

According to Taparia's analysis of option data, the broader trading range for Nifty is between 23,500 and 24,500 levels. The immediate range lies between 23,800 and 24,200 levels.