Nifty and Sensex Show Strong Recovery Amidst Market Volatility in November 2023

The previous week saw both major indices, Nifty and Sensex, rise over 1.5%. Nifty closed at 25,910.05, while Sensex ended at 84,562.78. This strong performance marked a significant recovery, with the India VIX dropping 4.94% to 11.9375, indicating reduced market volatility and a more stable environment.

As the earnings season concludes, focus shifts to domestic indicators like Infrastructure Output data, Foreign Exchange Reserves, and Services PMI. Global market sentiment will also be influenced by key U.S. economic announcements, including the latest FOMC meeting minutes.

"Nifty continues to oscillate within a well-defined trading band between 26,000 and 25,750, even as it successfully reversed its two-week losing phase. A decisive breakout on either side will be key in shaping the next directional move. The index's strong footing above major moving averages and the conversion of previous resistance levels into dependable support zones collectively bolster the short-term bullish sentiment. However, persistent FPI outflows across both cash and derivatives segments warrant measured caution," said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.

Dhameja further noted that call writers have increased positions near higher strikes while put writers hold at lower levels. This indicates a cautious yet positive outlook as bulls and bears continue to vie for control. A breakout above 26,000 could lead to an uptrend, while falling below 25,700 might cause short-term weakness.

"Technically, Nifty Bank is approaching a potential breakout from its consolidation band, as the index continues to hold comfortably above its 10- and 20-day exponential moving averages. These moving averages-once hurdles-now serve as robust support zones. Moreover, the index's ability to stay above the major demand area around 58,100-57,900 reinforces the bullish tone and supports the prevailing uptrend. As long as Nifty Bank remains above the 58,000-57,800 support range, traders are advised to maintain a "buy-on-dips" approach," commented Dhupesh Dhameja.

He added that immediate resistance for Nifty Bank is around 58,650. A sustained move beyond this level could spark fresh momentum and possibly lead to an extended rally. Conversely, slipping below 57,800 might indicate emerging weakness and prompt short-term profit-taking.

Stock Recommendations

Technical analyst Riyank Arora from Mehta Equities Ltd. recommended buying two stocks on Monday, November 17. This follows Nifty's weekly gain of 1.64% after ending its two-week losing streak.

IndusInd Bank
Buy | CMP: Rs 848.25 | SL: Rs 825 | Target: Rs 880 / Rs 900
IndusInd Bank shows recovery signs after a mild correction with support near ₹825. If it stays above ₹850, it may reach ₹880 and ₹900. Use a stop-loss at ₹825.

Tata Motors
Buy | CMP: Rs 391.20 | SL: Rs 375 | Target: Rs 415 / Rs 430
Tata Motors is forming a strong base with support near ₹375-380. A move above ₹395 could trigger a rally toward ₹415 and ₹430. Traders should use a stop-loss at ₹375.

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