As we approach the start of a new trading week on 4th November, the analysis of multiple data sources, including FII/DII flows, option chain levels, recent price action, and the intraday 5-minute chart, offers insights into potential market movements. Let's explore these aspects in detail to gauge the possible scenarios for Monday.
1. FII/DII Activity and Sentiment
Institutional activity is a critical driver of market sentiment, particularly the cash inflow and outflow by Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs).
- 31st October 2024: Significant selling pressure was observed from FIIs, who net sold ₹5,813.3 crore in the cash market, while DIIs countered with net buying of ₹3,514.59 crore. Additionally, FIIs were net sellers in index futures (-₹1,989.46 crore) and stock futures (-₹5,278.41 crore), showing an overall bearish stance from foreign investors.
- 1st November 2024: The Muhurat trading session, characterized by very low volume and less significant trading activity, saw smaller movements. FIIs sold ₹211.93 crore, and DIIs sold ₹377.33 crore in the cash market, with minimal changes in futures and options.
Implication:
The aggressive selling on 31st October, especially in futures, reflects bearish sentiment from FIIs. DIIs provided support, but the net FII outflow remains concerning. Given the low volume on 1st November, it is more reliable to focus on 31st October data for analyzing institutional sentiment.
2. Option Chain Analysis: Support and Resistance Levels
The option chain analysis around the current NIFTY level of 24,300(1000 points up and down) provides crucial insights into market expectations and possible support/resistance levels:
- Resistance Levels:
- 24,800: Highest Call OI, indicating a strong resistance.
- 24,500 and 24,400: Additional resistances with notable increases in Call OI, suggesting potential selling pressure if NIFTY attempts to move higher.
- Support Levels:
- 24,300: High Put OI at this level suggests it as immediate support.
- 24,200 and 24,000: Lower levels with substantial Put OI, indicating buying interest that could act as further support in case of a downtrend.
Implication:
If NIFTY holds above 24,300 on 4th November, it could indicate a consolidation or potential bullish trend. A break above 24,500 would signal strength, while a fall below 24,300 could lead to further declines toward 24,200 or even 24,000.
3. Intraday Price Action (5-Minute Chart)
The 5-minute intraday chart reveals the following trends:
- Late Rebound on 1st November: After a significant decline on 31st October, the market experienced a late-session recovery during the Muhurat trading. This rally moved NIFTY back to the 24,300 level, which is currently acting as a pivotal point.
- Intraday Resistance and Support Zones: The intraday chart shows resistance near 24,320–24,350 and support around 24,250–24,270.
Implication:
The intraday rally suggests short-term buying interest, which could carry into early Monday. However, the strength of this rebound will need confirmation if NIFTY can stay above 24,300 for a sustained period.
4. Volatility and Sentiment Indicators (India VIX)
The India VIX (Volatility Index) has been stable, around 15.55–15.90, indicating moderate volatility expectations. This level suggests market participants are not overly fearful, but a sudden spike in VIX could signal caution.Potential Scenarios for 4th NovemberScenario 1: Bullish Bias
- Key Levels: If NIFTY opens and sustains above 24,300, this could encourage further buying interest, pushing the index toward 24,500 and testing resistance at 24,800.
- Trigger: A rise in DIIs' buying or lower-than-expected FII selling could fuel a bullish trend, especially if the index surpasses 24,350 early in the session.
Scenario 2: Bearish Breakdown
- Key Levels: Failure to hold 24,300 could lead to selling pressure, targeting 24,200 and possibly 24,000 as support levels.
- Trigger: Continued FII selling pressure or a rise in India VIX could weigh on sentiment, driving the index lower.
Scenario 3: Range-Bound Movement
- Key Levels: The market may oscillate between 24,250–24,500, consolidating within this range as traders assess institutional flows and other triggers.
- Trigger: A lack of strong directional cues from FIIs and DIIs, combined with stable VIX, could lead to choppy, sideways action.
Conclusion
Given the cumulative insights, 24,300 is the critical level to watch. Sustained trading above this level may indicate a bullish stance, with targets of 24,500 and 24,800. Conversely, a breach below 24,300 would signal weakness, potentially leading to declines toward 24,200 or 24,000.
Traders should monitor institutional activity, particularly FII trends, and keep an eye on India VIX for any shifts in volatility that might impact sentiment.