No Diwali fireworks for investors

But, the current Vikram Samvat 2071 year is expected to reward investors amply as the long-term bullish trend is intact

The Indian stock markets closed lower in fourth week straight. The BSE Sensex, after sailing above 26,000 mark for more than two months, plunged to a low of 25911 during the week. It however, managed to surface above this psychological level and closed above it on Friday, when the markets staged a small technical rally.

The Sensex had closed the previous week with a loss of 271 points at 26297. The global cues, however, continued to impact the markets negatively. Therefore, after opening the new week at 26275, the most tracked market barometer rallied up to a high of 26551 as on Tuesday, a day before voting in Maharashtra and Haryana for state assembly elections, on Wednesday. The index started to recede from that weekly peak and then reached a low of 25911 as on Friday, before markets entered a recovery phase following buying by domestic institutional investors. The Sensex rallied up to a high of 26249 before closing at 26109 with day's gain of 109 but with week's loss of 189 points. Thus it turned out to be the fourth straight week of losing streak for the Indian stock markets mainly on the negative news emanating from foreign nations.

The Indian stock markets succumbed to a global sell-off in equities and commodities due to growth concerns emanating from debt problems in Europe and at the same time, end of the US's stimulus programme in October.

Thus, the month of October has proved to be inauspicious one once again not only for the Indian stock markets but also worldwide. The Indian stock market investors were more worried because the fall in the markets happened just ahead of the greatest Indian festival of lights, Diwali, as it is a belief that during Diwali days, the markets should be stable if not rising. Although, the last four weeks have been characterised by downtrend in most of the traded stocks, the Vikram Samvat (year) has been extremely good for the markets as prices, when they were at their peaks a few days ago, brought in multiple gains from the levels they were ruling at the time of the previous Diwali. Even at the present depressed levels, most of the stocks are comfortably well above their prices that were prevalent at the time of the previous Diwali.

The monthly and quarterly data pertaining to various subjects of greater public interest like trade deficit and inflation that were released during the week have brought mixed fortunes. Whereas the trade deficit for September widened to $14.20 bn, chiefly on increased gold imports, the newly constituted wholesale price index (WPI) hit a five year low of 2.38. The index for food prices cooled down to 33 months low.

However, the most positive news for the Indian economy was sustained fall in the world crude oil prices.

Brent crude last week fell to close to 88 dollar per barrel. In fact, the oil market has dropped by more than 20 per cent from its high reached in June this year, as supplies rose and demand slowed in USA, Europe and China. The cheaper oil has enabled the domestic oil marketing companies to reduce selling prices of petrol and prompt them to cut diesel prices significantly anytime soon, which would result in softening of the inflation and consequently, soften the Reserve Bank of India's stance over tight money policy. Although, the Reserve Bank Governor Rajan has categorically denied an interest rate cut in near future, he might rethink over the issue and announce a cut of at least 0.25 per cent in interest rate in December 2 review meeting.

Therefore, though the markets do not appear to be strong enough to brighten up the Diwali days of the stock market investors, they are most likely to remain bullish in the new Vikram Samvat 2071 and reward investors amply provided they invested in right scrips of the right management groups.

Long-term investors may buy shares of Mahindra and Mahindra, HDFC Bank, Larsen and Toubro, Divi's Laboratories, State Bank of India, Sintex , Marksans Pharma, NTPC, Borosil Glass, Gujarat Borosil Glass, NBCC, Balkrishna Industries and Granules India, during Moorat trading and then concentrate on these and few other promising scrips for long-term holding.