Indian benchmark indices had their worst September since the Lehman Brothers crisis unfolded in 2008. It has been a terrible two weeks for the market with banking and NBFC shares leading the collapse. The Sensex ended the month of Sept with a loss of 6.26 per cent, while the Nifty fell 6.42 per cent.
Banking and NBFC stocks plunge
In fact, the DHFL management has clarified that the housing finance company has more than adequate liquidity, the promoters have not pledged their stake and the ALM is very comfortable.
This however failed to assuage the fears of the market. Yes Bank too plunged on reports that Rana Kapoor's term would expire on Jan 31, 2019. The stock hit a 52-week low of Rs 172, from 52-week high levels of Rs 404, seen a few months back.
Heavyweights manage to hold up
What was an interesting feature of the markets is that heavyweights like HDFC Bank, HDFC, Reliance, TCS and Infosys held quiet well. If these stocks had to fall, we would have seen an enormous amount of drop in the benchmark indices.
The midcap and the small cap index too fell sharply, particularly on Friday. With Friday's fall the midcap index has lost a staggering 19 per cent from peak levels, as against a drop in the Sensex of about 7 per cent from peak levels.
It is likely that the index may see some technical bounce given the way stocks from the sector have fallen.
Markets to remain volatile ahead of credit policy
Indian benchmark indices are expected to remain increasingly volatile ahead of the RBI Monetary policy.
It is also a truncated week for the market, which will be closed on Oct 2 for a holiday.
The RBI will conclude its two day policy meet on Thursday Oct 4. In all probability we will see a 25 basis hike in the repo rate given the way the rupee has collapsed. International developments like trade tariffs and the rupee will also dominate.
Investors may continue to buy selectively into good quality stocks. However, it is a good idea to stay partially in cash ahead of the crucial state elections in MP, Rajasthan and Chattisgarh.
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