Immediate supports for Nifty are placed around 17850 and 17750

Nifty formed a support base in the range of 17000-16900 at the start of October and then it recovered gradually throughout the month. The intermediate dips during the month got bought into and the index ended above 18000 with gains of over 5 percent compared to last month’s close. 

The October F&O series started with the rollover of short positions by the FIIs. But as the series went on, short positions were closed, which caused the index to go up. The Bank Nifty index relatively outperformed at the start of the series when the benchmark consolidated around the support and, hence, as the markets recovered, we witnessed long formations in the banking space. Both the indices ended October around the high point (on a monthly closing basis) and if we look at the derivatives data from last week’s expiry, the rollover in both Nifty and Bank Nifty was positive. FIIs have traded with net short positions throughout the October series, but their "Long Short Ratio" at the start of the November series stands at 59 percent, which indicates that they have rolled more long positions into the November series. On the other hand, the client section has been riding this trend with more net long positions throughout the series, and they too now have 59 percent long positions at the start of the November series.

Apart from the rollover data, if we look at the global cues, then the US markets have been recovering from their respective long-term supports and the Dollar Index too has cooled off from the highs in the last few sessions. The Nifty has ended above the 18000 mark, and the RSI oscillator on the daily chart continues to point at positive momentum. But the same readings on the lower time frame (hourly) charts have entered the overbought zone. It will be important to see how far it goes from here because overbought setups usually lead to either a time correction or a price correction. This week, traders will be keenly watching the RBI meeting, which is scheduled for November 3rd November while US FOMC meets too, which could dictate the near-term movement for equity markets. With a rise in index levels, the supports are shifting higher and the immediate supports for Nifty are placed around 17850 and 17750. On the flip side, 18100 and 18270 will be the resistance levels to watch out for.