As we write, the markets have lost ground in 11 trading sessions out of 13. In these 13 sessions the Sensex has lost close to 2000 points.
The first day after Diwali has begun on a weak note, with the Sensex losing 256 points. The trend is likely to continue until the next year. Here's why you could stay away from the Indian markets until next year.
Interest rate hike in the US in Dec
When interest rates are hiked there is likely to be an outflow of capital from the Indian markets by Foreign Portfolio Investors, which could lead to a further fall in the markets. They would obviously chase higher safe investment yields in the US. Small investors should wait for the dust to settle and hence investing in the new year would be a good idea to curb losses.
Winter session of parliament might disappoint investors
The results of the Bihar elections, means that the opposition is likely to adopt a more aggressive stance in the winter session of Parliament. If the Rajya Sabha remains a washout like the Monsoon session, the first casualty would be the GST Bill and that is not going to be good news for investors.
In fact, the GST Bill is the only positive trigger left for the market. Any disappointment on this front could be a disaster for the markets.
No interest rate cut in RBI policy meet
It is highly unlikely that the RBI would cut interest rates in its policy meet scheduled in Dec. With inflation in Oct hitting 5 per cent, the Reserve Bank of India is unlikely to move on Dec 1. The RBI has already front loaded interest rate cuts.
All in all, the chances of these negative developments could push benchmark indices lower. The only hopes is that the government might reach out to the opposition to push the GST Bill. That is the only trigger that could possibly lead to a rally.
It is just hoped that better sense prevails and the GST Bill is passed. If not, we are heading to levels of 24,000 points on the Sensex.