What is your stock market view for 01st October, being the last trading day of the week? Do you see the weakness in the market continuing?

On Thursday, the trading started in a rather steady manner but the news flows and the expiry pressure pushed the markets lower. The news of higher inflation pressures in the US and a report by Citi hinting that the RBI could hike reverse repo rates in October, resulted in a spurt in volatility in rate sensitives and expiry selling which took the markets lower.

Ironically, on a day when financials were under pressure, the Bajaj financial twins were among the top gainers. The action, however, was actually focused on stocks where open interest accumulation had been intense. It was a case of either long positions being lightened or shorts covered, so the real picture could only emerge on Friday.

FPI selling continued unabated on Thursday with a lot of cash-futures arbitrage positions getting unwound on Thursday. Foreign investors were net sellers on 30-Sep selling about Rs.2,226 crore of equities. The domestic institutions were buyers but only marginally. The second half of September saw some heavy selling by FPIs. Global market stayed weak.

The sharp correction in the Dow by 550 points and sharp fall in European markets have resulted in weak early trading in SGX Nifty by over 100 bps. The global inflation concerns and the possibility of the RBI hiking the reverse repo rate by 15 to 20 bps remain the major pressure points. Friday could also see some weekend selling, so prepare for downsides.