OCTOBER – HERE’S TO YOU!

about 19 days ago
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Rains have all but gone and the October heat has started beating down. Even as we sweat it out, the heart has hope as winter will soon come calling, taking away the heat. Along with hope, the festivities have begun. With Navratri round-the-corner, Diwali and the wedding season expected to take off, hope is high that a lot of suppressed and repressed buying since last year will be unleashed this Oct – Nov.

And probably that’s what the market also thinks, which explains why the market opened the first session of this month of a high note.  There is a lot to look forward – mind you, the same threats and worries which were voiced last week – USA bond yields, tapering, reversal of interest rate cycle, China – everything remains. Yet, it’s like as though today, the market has turned its head to the other side, with the breeze of optimism beating away the blues of last week. But whether this mood is sustainable or not?

Well, the market is first gearing up for the RBI meet on the 8th of Oct – will it or wont it? Logically, there will be no change as such but maybe the ground will be laid for things to come in the Dec policy. With growth still lagging, it is unlikely that RBI will hike rates; that will likely be put on hold till end of the year. Jayanth Varma, a member of the RBI’s monetary policy committee was the only voice of dissent in the previous MPC meet; he voted against maintaining the accommodative stance of the monetary policy. All eyes will be on Varma – will he continue to dissent or relent or are there more “dissent” voices joining Varma?

But RBI is sure to send some signal of ‘normalisation’ by probably tapering its bond buying scheme, under the government securities acquisition programme. This will send out the message that it will begin with liquidity management first and then evolve to rate hike.

Apart from the RBI, this month will see the usual macro data – IIP, CPI, WPI, along with import-export data, services PMI. And then there is also the earnings season which will kick off with TCS announcing its Q2FY22 numbers on the 8th. Infosys is scheduled for 13th and so is Wipro. In Banks, HDFC Bank will take the lead on 16th. Once the RBI meet is over, it will be back to company or earning-wise news lead market movement.

While all this happens, news from China and USA will keep the markets swinging like a yo-yo, up and down. Oil prices will also need to be watched – today an OPEC + meet is scheduled and we will know whether the supply will be increased or will maintain status quo even as demand threatens to outstrip supply. An OPEC+ decision to add more supply to the market than planned could calm prices down but then, one never knows.

And in the primary market, it is expected to be a very busy month as a bevy of companies are getting ready – Emcure Pharma, Nykaa, MobiKwik, Ixigo, Star Health, Utkarsh Small Finance Bank, ESAF Small Finance Bank, Sterlite Power, Penna Cement, Shriram Properties, amongst many more.  The month of October is expected to collect over Rs.30,000 crore, with another Rs.20,000 crore of IPOs expected in November, excluding the mega Rs.16,600 crore IPO of Paytm or the Rs.75,000 crore LIC IPO.

October holds the promise of being an action-packed, volatile month. The overall mood will remain optimistic with spurts of downsides. Keep booking profits and buying quality stocks on dips – timeless and easy but difficult mantra of investing remains.

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