Markets hovering in directionless mode amid lack of triggers

Spooked by muted Q2 results season accompanied by several downgrades, persistent FII selling and uneasiness over Assembly elections outcome; the equity market closed on a very weak note during the week ended. The downturn in the market continued as India’s retail inflation surged to a 14-month high in October, dampening expectations of an interest rate cut in the upcoming RBI policy meeting in December. BSE Sensex declined 1,906.01 points or 2.39 percent to close at 77,580.31, while NSE Nifty shed 615.5 points or 2.5 percent to finish at 23,532.70. Broader markets underperformed with the BSE Mid-cap Index shedding nearly four per cent and the BSE Small-cap index declining 4.6 per cent. On the sectoral front, Nifty Metal and PSU Bank indices shed more than five per cent each, Nifty FMCG and Healthcare indices fell more than four per cent each, Nifty Auto and Oil & Gas indices slipped nearly four per cent each. However, Nifty Information Technology index added nearly one per cent.

It’s been a ‘Buy US, Sell India + other EMs’ trade due to the Presidential election event in the US say observers. During the week, the Indian rupee ended 3 paise lower at 84.40 per dollar on November 14 against the November 8 closing of 84.37. High US bond yields and a strengthening dollar post-election have impacted emerging markets like India, and FII activity remains a key factor influencing Indian equities in the near term.

After a muted September quarter results season, investor focus during the week ahead will be on Maharashtra Assembly Elections outcome, incoming economic data and developments on the global economy front. As Maharashtra is both an economic powerhouse and a major political battleground, the election outcome could influence policy decisions and investor sentiment, particularly in sectors that are directly impacted by government actions. The G20 summit will begin on Monday. The summit gains prominence as the US sees leadership change and global trade faces risks from rising trade barriers. The Indian stock market will remain closed on Wednesday, November 20, in observance of the Maharashtra Assembly elections.

Quote of the week: The four most dangerous words in investing are, it’s different this time — Sir John Templeton

Follow market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock is its performance over five years.

F&O / SECTOR WATCH

Tracking the sustained weakness in the cash market, derivatives segment witnessed renewed short selling by bears. In the options market, the highest Call Open Interest for Nifty was seen at the 24,000 and 23,600 strikes, while the notable Put Open Interest was at the 23,500 and 23,000 strikes. For Bank Nifty, the prominent Call Open Interest was seen at the 51,000 and 50,500 strikes, whereas notable Put Open Interest at the 50,000 and 49,500 strikes. Implied Volatility (IV) for Nifty’s Call options settled at 13.42 per cent, while Put options conclude at 14.08 per cent. The India VIX, a key market volatility indicator, closed the week at 15.44 per cent.

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