InvestorQ : How do you view the stock market moving on Monday October 03rd 2022?
Arti Chavan made post

How do you view the stock market moving on Monday October 03rd 2022?

diksha shah answered.
2 months ago

On Friday, the Nifty had staged a sharp bounce back after the markets were pleased by the fact that the RBI only hiked rates by 50 basis points in line with expectation. That had resulted in a lot of short covering on Friday. Metals and financials staged a sharp come back, but sustainability may be the key and Monday is unlikely to be a positive day.

On Friday, the breadth of the market as measured by the advance / decline ratio or A/D ratio was firmly positive at 41:9. However, there appears to have been a lot of short covering seen ahead of the weekend. From the fine print it is clear that, like the Fed, the RBI also is keen to hold on to its hawkish equations till inflation is firmly under control.

Foreign portfolio investors or FPIs were net sellers in equities to the tune of Rs.1,565 crore as domestic funds and LIC bought stocks worth Rs.3,246 crore on Friday. The FPIs performance disappointed for the month of September 2022, as they net sellers to the tune of Rs7,624 crore. FPIs sold equities worth $2.3 billion in the last 8 trading sessions.

Early indications are not good for Indian markets. On Friday, the Dow fell by 500 points and NASDAQ was down 162 points as it was a return to weakness and a return to reality for markets. The SGX has virtually given up all its Friday gains in early trades on Monday, losing 217 points in early trades on the back of selling pressure.

The early trends are hinting at a very weak opening for the Nifty on Monday and it is unlikely to make any serious recovery during the day. There will be unwinding of the gains of Friday. Also, the tough language of the RBI in its bi-monthly statement is likely to be an overhang for markets. The markets are closed on Wednesday, so a truncated week would also pressure markets. Overall, it is time to use any rises in the market to keep selling.