October usually a favourable month for equity markets

New Delhi, Sep 29 The ‘sell on rally’ market construct is likely to change in October. October is usually a favourable month, both for the US and Indian markets. There are indications that this historical trend may play out this October too, says V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The ‘triple whammy’ of up-trending dollar, US bond yields and Brent crude is showing signs of easing. If this trend continues it will facilitate a recovery in markets. Stability in the US market on Thursday also can be a supportive factor, he added.

Sustained FII selling may continue to weigh on markets. FII selling of Rs 25,000 crore this month has pulled down the banking stocks making their valuations attractive. The Q2 results of the banking segment will be good and the market can respond positively to this, he said.

The US PCE inflation data expected tonight is significant since it can indicate the trajectory of US inflation and interest rates, he said.

BSE Sensex is up 169 points at 65,677 points on Friday. NTPC is up more than 3 per cent in trade.

Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher says Nifty tanked heavily after opening on a positive note in the morning session resisting near 19,750 zone and as the day progressed breached below the significant 50 EMA level of 19,550 to turn the bias once again weak indicating a “Bearish Engulfing Candle” on the daily chart.

The index would have the next major support zone of 19,250 if it sustains below the 19,550 zone in the coming session. The support for the day is seen at 19,400 levels while the resistance is seen at 19,700 levels, Parekh said.