Markets in consolidation phase

Buoyed by China’s recent additional stimulus measures and short-term policy interest rates cut, sliding international crude oil prices in the international market, renewed foreign fund inflows and positive cues from US markets; Indian market extended gains for a third consecutive week. For the week, BSE Sensex added 1,027.54 points or 1.22 percent to end at 85,571.85 points, while NSE Nifty rose 388.05 points or 1.50 percent to end at 26,179 points. On September 27, the Sensex and Nifty touched fresh highs of 85,978.25 and 26,277.35, respectively. The BSE Small-cap index ended flat and the BSE Midcap index added 0.7 percent. FIIs sold equities worth Rs3,932.80 crore, however, DIIs bought equities worth Rs15,961.71 crore. It is pertinent to observe that for the month till now, FIIs bought equity worth Rs22,403.72 crore and DIIs bought equities worth Rs24,211.50 crore.

Some observers feel that some of the FIIs may be inclined to Eastern Asian peers given the stimulus and attractive valuations like China. US rate cut, a record peak in gold prices, Chinese economic stimulus, and escalating tensions in the Middle East have bolstered the appeal of silver. Prices at the benchmark London spot market breached a 12-year high of $32.50 an ounce, while in the domestic futures market, it is well above Rs93,500 per kg. Gold and silver have a strong positive correlation. Both are considered precious metals and are often influenced by similar market factors. Silver prices are influenced by both investment and industrial demand, but its industrial use can create additional volatility in prices. Stronger industrial growth typically translates to higher demand for silver, as more than half of global silver consumption is used for industrial purposes. New transaction charges announced by NSE and BSE recently will come into effect from October 1 (Tuesday). While NSE came out with a new fee structure for cash and derivatives segments, BSE announced changes for Sensex and Bankex options contracts of the equity derivatives segment. In the near term, the overall sentiment may remain positive amid likely consolidation. Track Q2 earnings data, manufacturing & services PMI numbers, monthly auto sales, US jobs data, and Federal Reserve Chair Jerome Powell speech in the coming truncated week. The market will be shut on October 2 for Gandhi Jayanti.

Quote of the week: I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful — Warren Buffett

Be prepared to invest in a down market and to get out in a soaring market, as per the philosophy of Warren Buffett.

F&O/ SECTOR WATCH

Settlement week witnessed robust trading in the derivatives segment. Rollovers in Nifty futures were higher at 79 per cen (last month 77%), above 3-month average of 75 per cent, in value terms at Rs45,068 crore versus Rs35,530 cr. In contrast, the Bank Nifty’s October rollover rate stands at 66.88 per cent, slightly below both last months and the three-month average of 71.45 per cent. On other hand, market wide rollovers stood at 89 per cent (last month’s market wide 90%) in value terms Rs42,3669 cr, which flat than last month Rs38,1449 cr.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)