Nifty Outlook for November 2: Can the 23,200 hurdle give way to a rally towards 23,500 this week?

The Nifty extended its gains for a second consecutive session on Friday, advancing 116 points to settle at 23,053. After a choppy start, the benchmark index found its footing around mid-session and rallied more than 200 points from the day’s low. However, profit-booking in the second half pared some of the gains, with the index eventually settling at a two-week high.

For the week, the Nifty gained 2%.

Among the Nifty constituents, Trent, InterGlobe Aviation (IndiGo) and Infosys emerged as the top gainers. Shriram Finance, Nestle India and Mahindra & Mahindra were among the biggest losers.

Sectoral performance remained largely subdued, with most indices ending in the red. Nifty IT, Pharma and Healthcare were the only sectoral indices to close higher, while Consumer Durables, Media and Cement witnessed the sharpest declines.

The broader markets underperformed the benchmarks, snapping their four-session winning streak. The Nifty Midcap 100 declined 0.93%, while the Nifty Smallcap 100 plunged 1.85%.

Meanwhile, the Indian rupee strengthened by 31 paise to close at 94.95 against the US dollar. The domestic currency tracked gains across Asian peers as a softer dollar index, following the latest US economic data, supported regional currencies. The easing pace of foreign institutional investor (FII) selling in domestic equities also provided some support to the rupee, helping it outperform several regional peers.

What to expect from the stock market next week?

Indian equities are likely to remain range-bound, with bouts of volatility expected next week as investors assess geopolitical developments, global cues and the ongoing earnings season. Uncertainty surrounding a potential escalation in tensions between the US and Iran, along with the upcoming US midterm elections, could keep investors cautious.

Crude oil prices will remain another key variable for domestic markets. Brent crude continues to trade at elevated levels of around $113 per barrel, raising concerns over inflation and India’s import bill amid persistent geopolitical tensions.

On the global front, the US Federal Reserve’s decision to keep interest rates unchanged at 3.75%-4.00% could provide some support to market sentiment. The subsequent easing in US Treasury yields may also offer some relief to emerging-market assets. Meanwhile, the ongoing Q2 earnings season is expected to drive stock-specific action, with investors closely tracking management commentary and corporate performance for cues on the broader earnings outlook.

Reliance Industries will be among the key stocks in focus next week as investors track its Q2 results, scheduled for Friday. Market participants will closely monitor refining margins and the performance of its telecom business, Reliance Jio.

Following Jio Platforms’ strong listing at a 21% premium earlier this week, investors will also assess the telecom business’s earnings contribution and operating performance.

Among the other companies scheduled to announce their results over the weekend are CDSL, NSDL, NTPC, Muthoot Finance, Zen Technologies, Birla Corporation and Power Grid. Monday’s results calendar includes ITC, Marico, NALCO, Petronet LNG, Granules India, TBO Tek and Devyani International.

Nifty technical outlook

Nandish Shah, of HDFC Securities, said the Nifty has managed to sustain above its 20-day exponential moving average (EMA) for the second consecutive session, keeping the near-term outlook positive. However, the index is yet to overcome the crucial resistance zone around 23,175, where the previous swing high coincides with the 50-day EMA.

A sustained move above 23,175 could revive bullish momentum and pave the way for a rally towards 23,500. On the downside, 22,800 and 22,650 are likely to serve as immediate support levels.

Sudeep Shah, of SBI Securities, said the 22,800-22,850 zone would be a crucial support area for the index. A decisive break below 22,800 could intensify selling pressure and drag the Nifty towards 22,650 in the near term.

On the upside, the 23,170-23,200 range is expected to act as an immediate resistance zone. A sustained move above 23,200 could signal a further strengthening of bullish momentum.

Nagaraj Shetti, of HDFC Securities, said the Nifty is approaching a significant resistance zone around 23,200, based on the change-in-polarity principle. The index could therefore see some consolidation or a minor correction from current levels early next week before attempting another upward move.

However, a decisive breakout above 23,200 could trigger a sharp rally towards 23,500-23,600. On the downside, any correction is likely to find support around 22,800.

After a few sessions of consolidation, the Nifty staged a breakout on Thursday, closing above the crucial 22,800 mark and decisively reclaiming its 20-day moving average, said Vatsal Bhuva of LKP Securities.

Bhuva said the short-term outlook remains positive as long as the index holds above 22,800. He advised traders to consider booking partial profits around 23,250 while holding the remaining long positions with a trailing stop-loss at 22,950.