Nifty support seen at 19,329, Sensex eye to 65,630- All eyes on rupee ahead of RBI Policy decision

Nifty support seen at 19,329, Sensex eye to 65,630: All eyes on rupee ahead of RBI Policy decisionBy Anand James

Nifty having taken support 19329, the recent reaction low on Friday, a buy on dips mode is in play, which should pacify the nerves of those worrying about a dip after Muhurat trading day. Going forward, we expect 19170 to hold in the event of extended dips, with intermediate support at 10d SMA of 19262, while an outright rise above 19433 could also signal that we are back on to the 19840 trajectory. Collapse theories are on hold for now and the mood is cautiously optimistic.

With Nifty Bank, the slight outperformance on Friday comes on the heels of underperformance since the September peak. Most of the excess 2% fall that index logged in over the Nifty could be attributed to the sharp falls of the state owned banks. The standard deviation profile of Nifty Bank positions it better than Nifty to stage a measured push towards the 50dma at 44239. With this in perspective, we favour a bull spread strategy with calls, using 43700CE for the long leg and 44000CE for short leg, with a net debit of 165 points at available prices now on 15Nov contract. The strategy should give positive payoff as the index stretches higher, and exit may be considered on approach to 44300. Downside markers may be placed at 43700 or 43350 on the index.

USDINR meanwhile saw a strong push into the 83.3-83.4 something that we had pencilled as a trigger towards a breakout move higher. However RBI seeking an explanation from an electronic trading platform, cautions us into seeing this as an aberration and approaches the market fresh on Monday. That said, expect 84 to 84.6. Should we begin trading above 83.4. Alternatively, downsides are expected to be held in the 83.19, but a penetration of 83.02 could expose 82.78.

(Anand James, Chief Market Strategist at Geojit Financial Services. Views expressed are author’s own. Please consult your financial advisor before investing.)