The Muhurat session ended a nine-year tradition of gains, but only just, and most stocks still rose. With foreign money flowing in, the tone is positive.
Samvat 2083 got off to a wobbly start.
The Sensex jumped almost 400 points in the opening minutes of Sunday’s Muhurat trading session, touching 81,422.51. It couldn’t hold the gain. By the close, the Sensex was about 29 points lower and the Nifty had slipped just below 25,000. The India VIX, the market’s fear gauge, rose during the session.
That ended a run of eight straight years in which the benchmarks closed higher on Muhurat day. But the dip was tiny, and beneath it, buying was broad: 3,136 stocks advanced during the session
In other words, the big index stocks took a breather after a huge week, while the rest of the market kept climbing.
The week that was
Overall, the market saw a big week. The Nifty rose 7.58% last week, its best week in more than a year, and closed Friday at 25,030, its first close above 25,000 since the Iran war began in February. Foreign investors bought ₹38,971 crore of Indian shares over the week, according to NSDL data, while domestic institutions sold every day.
After such a move, plenty of traders used the session to book a symbolic profit.
The positives
On the evidence available, the market enters the week with a constructive tone. Foreign money is flowing in, oil is well below last week’s highs, and breadth during the Muhurat session was strong even as the indices dipped.
The Nifty has risen about 10% in eight sessions. Rallies that fast tend to invite profit-taking, and the holiday-shortened week, with Monday trading followed by a Tuesday holiday, gives investors a natural moment to lock in gains. A pullback after a run like this would be ordinary, not a sign that the rally has broken.
The negatives
The Frontline indices may have headed into overbought positions, according to technical analysts with the sharp rally last week. Hence, the markets could see some profit booking in the coming week at higher levels.
Five things to watch
Monday’s open. Regular trading resumes on Monday after the Muhurat session. Markets are closed on Tuesday for Diwali Balipratipada. Also, watch for the Nifty Expiry on Monday, which after a strong week could keep the markets on the edge.
Oil and Iran. Brent fell 16% last week to $98.32 on hopes of a US-Iran deal. Over the weekend, US strikes on Iran’s Qeshm Island and tanker attacks in the Strait of Hormuz showed how fragile those hopes are. Oil’s direction will matter most for banks, carmakers, paint companies and airlines, which led last week’s gains.
Inflation, twice. US consumer price data on Tuesday will shape expectations for a possible Fed rate increase in December. India’s October retail inflation data is due later in the week. September’s reading was 5.54%; a softer number would ease pressure on the RBI.
China’s trade data. China publishes its October trade numbers on Tuesday. Another surge in exports would add to worries about cheap Chinese steel and chemicals reaching India.
Foreign flows. Last week’s buying was driven largely by global investors moving money out of AI-heavy markets such as South Korea and Taiwan. Whether that continues will decide how far this rally runs.
The new Samvat year has begun with the market in better shape than it has been for months. The question for the week is not whether investors are optimistic, but whether there will be a higher level of profit booking.
About The Author
