Stocks

Markets to open October month in deep red

KS Badri Narayanan Chennai | Updated on October 01, 2021

FPIs remain on sell mode; short rollovers seen in F&O

Domestic markets are likely to see a sharp gap-down opening on the first day of October. With foreign portfolio investors selling aggressively in the last few days, markets are likely to see a correction, said analysts.

Adverse global cues will impact Indian markets too, they said and added, though on domestic front, things are looking better on economic and Covid 19 situation.

Eight core industries grew 11.6 per cent in August over a year ago, showed government data released on Thursday. Growth in these sectors picked up compared to 9.9 per cent year-on-year in July. Between July and August, activity moderated sequentially by 0.9 per cent.

As the US Government working hard to prevent a total shutdown, the market is on the edge. Besides, fears over rising inflation and the US Federal Reserve pulling back market-accommodative policies also impacted the overall sentiment.

Though the Congress voted through a short-term spending bill to keep the US federal government running till early December, the House soon needs to pass $1-trillion infrastructure bill, as Democratic factions are threatening to block it.

Amidst all, the Dow Jones Industrial Average declined 546.80 points, or 1.6 per cent, at 33,843.92 and the broader S&P 500 edged down 51.92 points or 1.2 per cent at 4,307.54. Tech-focussed Nasdaq Composite Index fell 63.86 or 0.4 per cent to end the month at 14,448.58.

Asian stocks down

Tracking the overnight US slump, equities across Japan, Australia, Taiwan, Korea and others tumbled between 1.4 and 2.4 per cent. However, Chinese markets are up marginally in early deal on Friday.

SGX Nifty at 17,450 indicates a gap dow of opening of 160 points for Nifty futures, which on Thursday closed at 17,611.80.

Last week, foreign institutional investors have turned net sellers in a big way. On Thursday alone they (net) sold shares worth Rs 2,225 crore.

Rollovers dip to 68%

Short rollovers also indicate a negative opening. The Nifty 50 index saw a rollover of 68 per cent in open interest positions to October series. This is lower than the previous month's figure of 74 per cent. As Nifty October futures closed at 17,611.80 at a discount to the spot price of 17,618.15, rollovers signal short positions; Nifty September futures closed at 17,619.10. Besides, with volatility index still ruling above 18, the market is likely to remain under pressure, they said.

As the corporate result season begins from the second week of October, the market direction will be dictated by the numbers. Analysts expect a better show in wide range of sectors for the second quarter.

Published on October 01, 2021

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