Hope Returns With October

In the last few months,the markets have not behaved according to expected lines and most asset classes have belied their expectations. While the markets have been extremely volatile between July and September, October has brought in some amount of relief as the markets have been more or less steady with the BSE Sensex staying between the 38,000 and 39,000 mark mostly marked with small to moderate gains. The NSE Nifty has also seen modest gains.

This could be good news for the investors and a hope that stability is returning to the markets. This is despite the fact that most market and financial analysts have predicted that the volatility will stay for some time to come.

BJP’s triumph in the state elections can also be a push for the markets to stay afloat as market and investor confidence is on the rise on the hope that with a stable government, there will be stability and balance in the markets.

One of the major reasons for this calm is the financial package announced by Finance Minister Nirmala Sitharaman which has boosted sentiments across the spectrum. There is hope that the government will look into all aspects of the economy and step in to correct the anomalies in the system. As a result the economy will perform better and things will turn green.

On the contrary, there are ominous signs from the sagging GDP growth and constant hammering by experts and international bodies who have said authoritatively that India’s growth rate will suffer in the near to medium term. This is definite to have its toll on the markets sooner or later.

Add to that the issues revolving the global tariff wars and Brexit related issues which are certain to create uncertainties and trigger an economic slowdown across the globe. India will be no exception and will bear the brunt of these developments.

However, there is a general hope among investors that this Diwali would be good and markets would continue to show promise post Diwali and Muhurat Trading on October 27 will bring in good tidings for the investors. While the first part of the festive season during the Navarathras have been good for the markets, people expect that the latter part of the season will be as promising and markets will bring in good returns for the investors and continue till the beginning of the next year. Investors are also expecting a further dose of reforms and a fresh new financial package from the finance minister to further boost market and investor sentiments.

Of course, things will be clearer in the next couple of weeks when the markets emerge from the post Diwali euphoria  and a clearer picture emerges.

Our cover package in this issue looks at the equity markets and its prospects under the new finance minister and how she steers the markets towards profitability. While valuations are still  high and unrealistic in the market, it remains to be seen how the markets will behave in the months to come. There is general expectation that the markets will behave in a balanced manner and continue to rise because of the financial packages. However, a general view is that enough has not been done to boost market sentiments and the government needs to step in and intervene more to boost the sentiments.

We also look at how the new rules by markets watchdog Sebi will affect investors and how the finance minister’s announcements will affect the real estate sector which has been down and out for the last couple of years.

The next month would be interesting for the investors as the market will run its test after the festive season sees its end. That will be the real test of the markets which have to show if they are strong enough to withstand the global pressures and perform.