A volatile yet range-bound November series expired on Wednesday. The Nifty was up only around 1 per cent during the series, yet swung around quite wildly between 5,400 and 6,000 levels. It failed to pierce its upper end, signalling that it remains in a consolidation/corrective groove. Most of the action in November was outside the index. The rise and fall of RPL, the sharp moves in RNRL and Essar oil remain the more abiding memories from the last one month.
Interestingly, as positions rolled over to December there was visible reluctance to back the outperformers of November. With the exception of RPL, which spiked on account of a short squeeze, the rest of the energy stocks seemed sapped of energy. Power stocks don't seem to have rediscovered momentum after their recent fall. Stocks like Reliance Energy, Tata Power, NTPC, Neyveli seem to be struggling to get back to their old highs. The high-flying oil stocks have cooled down as well. Perhaps traders realise that their gains have been too heady: Essar Oil is up 300 per cent, MRPL has doubled and Bongaigaon is up 50 per cent in the November series.
After all the sector rotation of November, can December find a fresh set of stocks to carry the market higher? There is interest building up again in banks, sugar, metals, real estate and media. Equally, fundamental analysts are calling for a pullback in the ignored sectors as the overheated sectors cool off. The first few days of the new series will be crucial in establishing the undertone. This is important as the Nifty has been unable to latch on to positive global cues in the last few days. Traders need a shot of confidence. For this, leadership is necessary. Either big stocks like Reliance, L&T have to move or broad-based momentum has to build up in midcaps again. It's not impossible. Global cues too, will be important particularly as there is a trigger pitted on December 11 with the FOMC meeting.
It's no longer a smoothly trading market, hence the call for December is not easy. Chances are that we will snap out of the November range this month, but on which side—is frankly a toss of a coin. Consensus is veering slightly towards the downside but as you know consensus is not always right.