November for bulls, but volatility is new normal

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By S Jha

New Delhi, October 28: Stock markets were unsteady on Friday even while index heavyweight Reliance Industries saved Sensex and Nifty from diving deep in the red on the lines of aggressive selloff in the Bank Nifty. The commentary of Maruti that the age of small cars may be over and the market leader in the passenger automobile brought the bulls charging for the scrip, pumping it by over five per cent.

Technical chartists have been claiming since Tuesday that Maruti has given a monthly breakout, with the scrip on Friday closing over Rs 9500. Reliance also gained handsomely, while the scrip has been an underperformer for over a month. A momentum in Reliance could be in sync with the precedents of the last three years when the Indian stock markets gained significantly in the month of November.

While the private banks led by ICICI Bank, Axis Bank, SBI Bank saw heavy profit booking, the meeting of the Reserve Bank of India next week proved dampener to the rally in the Bank Nifty. On Friday, the Bank Nifty had dived in the red by over 400 points only to recover in the late hours.

The foreign institutional investors are stated to have over 57 per cent long positions on the index in the November series. The domestic institutional investors had also been lately buying into the equity market. The FIIS on Friday had a net buy of Rs 1569 crores, while the DIIs sold Rs 613 crores. While the market volatility is not yet subsiding amid the rampaging global inflation following the Russian invasion of Ukraine, the traders are hoping to gain steadiness on the bourses in November.

However, scrips worth Rs one lakh crore could hit the market as the pre-IPO lock-in expires for the likes of Nyakka, PayTm, PB Fintech and so on, which may hurt the investors in the newly listed companies, which have already been hammered as they are trading at over 50 per cent discounts to their listing prices.

While the auto stocks were buzzing on Friday, the IT sector continues to remain out of favour in line with the tech rout on NASDAQ. The likes of Bajaj Auto, Hero Motocorp, Eicher Motors, Mahindra and Mahindra posted handsome gains in the Friday session. The IT stocks ended in the reds.

Dow Jones, which has been setting the tone for the Indian equity markets for a long time, was trading over two per cent higher, extending the gains after the quarter three GDP data showed the US economy doing much better, while the inflation also showed signs of tiring out.