UNLIKE IN September, Indian bourses witnessed a mixed mood in the month of October. In the first half of October, bulls had taken control over Indian market, but the second half was dominated by bears. The last week of the month saw a huge selling pressure. All the five trading days of the week ended in red.
Due to the continuous selling pressure, Indian indices broke their important psychological levels. There were expectations of FII inflow into Indian market during October, which in fact became a seller, transforming expectations into dark clouds of despair.
Global factors were the main drivers on Indian market during the first half of October. The sensex traded well above the 17,000 mark these days. However, it came down and crossed even the 16,000 mark to close at 15896, falling by 7.19 per cent. Nifty also fell by 7.31 per cent, during this time period. All sectoral indices were under pressure.
The September quarter results and the RBI policy declaration were the main events during the month. Both evoked mixed response among investors. Heavy weights like RIL and Bharti Airtel recorded a loss in the second quarter. The IRDA direction of second billing was another factor that lead to the sell off in telecom stocks.
The RBI stand to cut the flow of free money into the market was not in line with market expectations. RBI also raised SLR rates to 25 per cent. It also raised the provision for commercial real estate loans from 0.4 per cent to one per cent, leading to a huge selling pressure.
The reality sector fell too, with a decline of 15 per cent, being one of the biggest losses in October. The dull Q2 figures from some of real estate majors also added fuel to the selling pressure.
A new development this month was an increasing in trading time – from 9 AM to 5PM. It is believed that with the change, there will be an increase in the trading volume. However, a lot more needs to be done to implement it effectively.
Meanwhile, midcap and smallcap stocks were not away from the selling pressure. The pressure was more on smallcap stocks which recorded a 7 per cent while midcaps saw one by five per cent. Oil and gas sector stocks also declined by 10 per cent.
Moreover, the fire at the IOC plant in Rajasthan is still a concern of Indian traders. Engineering stocks witnessed a 6.4 per cent downfall. In this power sector were down by five per cent; a trend also seen in automobile and banking sectors.
The least affected sector this time, was health which marginally dropped by 0.61 per cent, when even consumer durable stocks had fallen.
Looking ahead is the only one idea right now. Due to the recent panic selling, good stocks are now available at affordable rates. Long term investors should milk the situation. The depressing Q2 numbers may be the passing phase of a worst situation. When the economy will be in it's full swing there will be something for everyone to smile about.
