Key indices hovering with positive bias

The October 20-26 period under review saw markets gain on three of the four trading sessions and lose in one session. There was one holiday on account of Diwali, while Muhurat session was more of the customary one hour of trading. BSE Sensex gained 403.96 points or 0.68 per cent to close at 59,543.96 points, while Nifty gained 126.35 points or 0.72 per cent to close at 17,656.35 points.

Dow Jones continued its strong showing and gained on three of the five trading sessions. It was up 1,312.94 points or 4.30 per cent to close at 31,836.74 points. The current momentum in the US market seems to have discounted the fact that at its next meeting, FED is likely to raise interest rates by 75 basis points yet again.

Samvat-2078 ended with minor losses. It did play catch up and put in a stellar performance to narrow the deficit in the last five trading sessions and managed to do quite a bit, gaining almost 1,400 points on the BSE Sensex and about 400 points on Nifty. Samvat-2078 ended with losses of 760 points or 1.26 per cent at 59,307 points on the BSE Sensex and 340 points or 1.93 per cent at 17,576 points on Nifty. Nothing significant, but it has been a roller coaster ride with the lows of the year being 50,921 points on BSE Sensex and 15,183 on Nifty. This is the first negative Samvat after seven consecutive years of gains.

Just to summarise the performance of Samvat-2078, it began the year close to the lifetime high of the benchmark indices, went down all the way to the lows made in June 22 and has come back to less than five per cent from the all-time highs. In short it failed to make any new headway and spent most of the year trying to play catch up.

Samvat-2079 began on a promising note with the benchmark indices gaining about 500 points and 150 points respectively. Looking at global cues where inflation and rising interest rates are taking their toll on economies, it's going to be a tough year no doubt. However, India seems to be better placed. The only risk we run is that being a better performing economy and still trading at decent valuations, FPIs may decide to sell Indian stocks to offset losses of other countries and bring down our markets as well. This I believe is the greatest risk to markets.

Markets saw decent results from the heavyweights ITC and Hindustan Lever. The banking sector was the start performer and the BSE Bankex gained 4.18 per cent during recent sessions. Results from ICICI Bank, Axis Bank and Kotak Bank helped in the big rise. Reliance Industries (RIL) profit for the second quarter was flat as compared in the quarter, a year ago. However, the announcement that they plan to demerge and list the financial arm will keep the share afloat.

Coming to the period ahead from October 27 to November 2, we would begin the period with October Futures expiring on Thursday. The current level of Nifty of 17,656.35 points the series is ahead by 838.25 points or 4.98 per cent. It's too big a lead to make any impact on the bulls' position. They would like to take advantage of this and begin the November series as well on a positive note.

The market has very strong support in the region of 17,350-17,450 on Nifty and 58,650-58,950 on BSE Sensex. This takes care of the previous top and also some more cushion on the downside. On the upside we have resistance around the 17,850-17,900 on Nifty and 60,125-60,300 on BSE Sensex. Post this, strong resistance is at 18,100 and 61,000 levels. This may take some momentum to overcome and a good time could be when the Fed meets on November 1-2. While the consensus is 75 basis points, how markets react would be totally unexpected.

The strategy would be to buy on any meaningful dips and sell on strong rallies. For some time now onwards, trade going forward, with a positive bias.

(The author is the founder of Kejriwal Research and Investment Services, an advisory firm)