What does October hold for market? Sensex closed in the red in past 5 out of 10 years

The Nifty fell the most in October 2008 when D-Street witnessed a cut of 25 percent, followed by 2009 when the index dropped by 7 percent, and 2 percent in October 2010.

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The carnage in September, where Sensex fell by over 2,400 points, left many investors on the back foot when it comes to investing. As we enter October, the ground looks shaky as benchmark indices are struggling near crucial support levels.

Historical data suggests that Sensex gave negative returns in the past five out of 10 years. The index fell the most in October 2008 when D-Street witnessed a cut of 25 percent, followed by 2009 when the index dropped by 7 percent, and a 2 percent fall in October 2010.

Bulls managed to take control of the market in 2011 when it rose by 9 percent, followed by 8.4 percent rally seen in 2013, and 5.4 percent gain in 2017.

The index which was hitting record highs in August this year lost momentum in September, thanks to fiscal worries, macro concerns, rising crude oil prices, falling rupee against the dollar, liquidity fears in NBFCs weighed down by IL&FS default, trade war woes, as well as persistent selling by FIIs.

For the month of October, all eyes will be on MPC (Monetary Policy Committee) meet which will unveil its results on October 5. Most economists feel that the Reserve Bank of India (RBI) might raise interest rates by 25 bps. Apart from MPC meeting, investors will watch out for earnings from India Inc. for the quarter-ended September 30.

Technically, Nifty50 is hovering near crucial support levels and a bounce back is on cards, suggest experts. However, the index has to still surpass 11,150-11,170 levels in October.

“As of now, based on our studies of long-term trends, we are of the firm view that market is in an intermediate downtrend and top for the year is in place at recent highs of 11,760 levels,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“So, obviously market should remain under pressure even in October series. That’s the reason we are advocating investors to sell this market on rallies and eventually, the recent lows of 10,850 recorded on Friday will get breached over a period of time,” he said.

Mohammad further added that if the index goes below 10,557 then we are afraid to say that we should be heading towards 10,000 kinds of levels, going forward. He said that we will not open up bullish options unless we trade above 11,500 levels. Hence, traders are advised to remain utmost cautious.

Another major reason which led to fall in markets in September was persistent selling by foreign institutional investors which have pulled out close to $3 billion from Indian capital markets on widening current account deficit amid global trade tensions.

If we look at data for the last 10 years, FIIs have been mostly buyers in the month of October. FIIs have taken out money from Indian capital markets in only 2 out of last 10 years, according to data from AceEquity.

FPI poured in Rs 24,000 crore in Indian capital markets in 2015, followed by Rs 18,000 crore in 2012, and Rs 10,000 crore in 2013. However, MFs have taken out money in the last 5 out of 10 years. Redemption pressure was seen in 2012, 2013, 2014, 2015, and 2016.

Disclaimer:-The views and investment tips expressed by investment experts are their own. Ripples Advisory advises users to check with certified experts before taking any investment decisions.

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