September was a nightmare for the Indian stock market. From Sensex to Nifty, heavy selling pressure was seen everywhere. Investors have lost crores of rupees in this decline. Now that October has begun, Dalal Street was hopeful that the market would regain its lost momentum. But even today the market is witnessing a sharp decline. Given the current situation, this path does not seem so easy. On one hand, there is demand during the festive season, on the other hand, negative signals are coming from the global market. In such a situation, investors need to be very careful about their portfolio.
Dalal Street expectations from the festive season
October is historically considered to be a very good month for the Indian stock market. Sunny Aggarwal, Head (Fundamental Retail Research) at SBI Securities says the biggest reason for this is the onset of the festive season. Demand for everything from automobiles, jewelry to consumer durables increases rapidly during this period. For most sectors, the second half of the financial year is quite good from the demand point of view. It affects the income of the companies. Looking at the last 10 years of data, Nifty 50 has given positive returns 7 times in October. Along with the Sensex, the Nifty rose by an average of 1 percent. While the Midcap 150 index has returned an average of 1 percent and the Smallcap 250 index has returned an average of 1.4 percent to investors.
Global tensions may dampen market sentiment
Although history favors the market, the current challenges scare investors. Crude oil prices are continuously increasing in the international market. Global bond yields are also seeing an increase. Foreign investors are constantly withdrawing money from the Indian market. Along with this, the weakness of the rupee has also increased the concern. Along with Sensex, Nifty also saw a massive fall of 6 percent in September. The Midcap 150 index lost 6.6 percent and the Smallcap 250 index lost 3.2 percent. This is the biggest drop in any month since March. Tejas Shah, director of iVirus Securities, believes that October will decide whether all the risks have been absorbed in the fall of September or a correction is yet to come.
Where is the biggest hurdle for Nifty?
The Nifty closed at 22,620 on Wednesday. Before the recent decline, the zone of 23,000 was acting as a strong support for the market. Analysts believe that this level of 23,000 to 23,100 has now become a strong barrier or resistance for the market. According to experts, the day the market crosses this level, the investor sentiment will be positive. After this the next target is to be 23,600. The good thing is that the market is currently in an oversold zone, from where we can expect some recovery soon.
Banks will show strength in pulling up the market
Banking stocks are going to play the most important role in determining the direction of the stock market in October. According to Tejas Shah, along with banking, the financial services sector has a large weightage in the Nifty. Historically, private banks have performed well in the month of October. If there is fresh buying in these stocks, the entire broader market will benefit. Investors are now also looking forward to the results of the September quarter starting from October, which will help to get an idea of the real position of the major companies. If the results are good, the market can get a new direction.
