Last week ended on a sombre note with a large decline on Friday reining in a strong rally that still saw Nifty closing well above 24,000. VIX, which was seen languishing near 15 early in the week, rose 5.5% on Friday alone, to end above 17, a sign that volatility expectation has risen. This is not alarming yet as we had seen 23 levels on April 7th, since when the ongoing rally has been on.
Will May series see continuation of April’s positivity?
Nifty50 ended the April series on a positive note with strong support from Banking & Finance stocks followed by FMCG. IT was the biggest laggard followed by Metals and Mining this month.
Nifty’s rollover rate for March stood at 79.08%, falling short of the 3-month average of 79.58%. Bank Nifty’s rollover was 75.05%, down from 76.98% in March. In April, 78% of stock futures ended on a positive note, which is a slight decrease from March’s 79%. However, this April’s figure is notably higher than the 66% positive closing rate observed in April 2024.
Highest rolls were seen in Crompton, Pidilite, Torrent Power, JSW Energy and Indigo while lowest rolls were seen in Siemens Persistent Systems, Delhivery and Kalyan Jewellers.
Sector-wise, Cement, Auto-Ancillary, Retail, and Chemicals saw the highest rollovers, while Healthcare and Power had the lowest. The highest long buildup was observed in Banks, Consumer Durables, and Telecom, signalling optimism in these sectors.
Bank Nifty takes the leg off the accelerator
Bank Nifty erased most of the gains made in the first three days post earnings numbers from Axis Bank. This came on the heels of a vertical rally that saw a new record peak, even when Nifty is still struggling way below September peaks. Two major contributors to the fall this week was Axis bank and HDFC Bank. The average RSI of index majors is close to overbought region. We expect Bank Nifty to drift down towards the previous breakout zone of 53,200-52,850 region in the coming week, from where we expect buying interest to emerge again.
Several banks are coming out with earnings next week, like SBI, Kotak bank, Indian bank, IOB, CUB, Bandhan bank, Equitas Small Fin bank, Uco and IDBI. While 33% of the index constituents have announced results so far and 25% of them had come out with positive numbers. Only two stocks among the five index majors, Axis bank and SBI, have not made fresh highs above 2024 peaks. Among them, Axis bank saw major sell-off this week contributing the most to Bank Nifty’s fall this week. All eyes would be on SBI which is coming out with earnings next week. Incidentally, at 73 in April series, SBI had the lowest rolls in 6 months.
First published in Financial Express
