Traders cautiously optimistic as seasonal trends hint at November gains

Synopsis

Traders are cautiously optimistic about November stock market performance, with historical data showing mixed results. While the Nifty and Nifty 500 have averaged gains in the past, recent rallies suggest a potential pause. Analysts anticipate a trading range with an upward bias, and a breakout above key levels could propel the Nifty to new record highs.

Mumbai: Traders tracking seasonal stock market trends may be inclined to bet on equities notching up gains in November. But signs of some fatigue after nearly two straight months of gains are holding them back from forecasting an outright bullish month.

In the past 10 years, the benchmark Nifty and the broader Nifty 500 have closed higher on five and six of the past 10 occasions during the month, respectively. Data from Motilal Oswal Financial Services showed that the Nifty and Nifty 500 in November have delivered average gains of 1.6% and 1.8%, respectively, over the past 10 years.

"After clocking gains of nearly 5.5% in the last two months, Nifty now seems to be taking a breather. However, in the short to medium term, we expect the index to trade in a broad range of 25,400-26,300 with an upward bias," said Sriram Velayudhan, senior vice president, IIFL Capital Services.

Velayudhan said a breakout above 26,300 levels will lend additional thrust to the benchmark Nifty 50. Both indices are almost 2% away from their record closing levels hit in late September last year.

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Even After a 5.5% Nifty Rise in 2 Months and fatigue fears...

Some analysts expect the Nifty to breach its lifetime high level of 26,277.35 this month.

In October, the Nifty and Nifty 500 gained 4.5% and 4.3%, respectively.

“As per seasonality, November has mixed cues. The index needs to hold key support of 25,500 to form a higher base and move towards 26,100 and the alltime high of 26,277 levels this month,” said Chandan Taparia, head of technical and derivatives research at Motilal Oswal Financial Services.

US benchmarks have shown strong seasonality in November. The S&P 500, Dow Jones and Nasdaq 100 have gained in nine of the past 10 years, and average returns for all three indices have been positive, between 4% and 4.5%. Domestically, key Indian indices made life highs at the end of September in 2024, after which markets have been gripped by a wave of risk-off sentiment.

Analysts see the India-US trade deal, likely to be sealed in November, as the next key trigger for the market. “The underlying setup remains supportive, backed by easing global financial conditions and positivity around a potential India-US trade deal,” said Velayudhan. Taparia said rollover of Nifty futures contracts to November on expiry of the October contracts last Tuesday stood at 75.8%, which is lower than its quarterly average of 80.7%. In the October series, open interest fell by 16.6% while the index rose by 5.4% on an expiry-toexpiry basis, suggesting short covering which could lead to fresh longs adding in the November series.

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