NOW IS THE TIME TO MOVE CAUTIOUSLY

Jaipur: Last week, the Indian stock market reached record highs, with the BSE index closing at 85,571.85 points and the Nifty index at 26,178.95 points, despite a slight fall on Friday. Two weeks ago, I predicted that the market would cross the 85,000 mark before Diwali, which has been fulfilled. While the bullish trend is expected to continue, given current valuations of Indian shares and upcoming election results in J&K and Haryana, a period of selling could emerge. Investors should therefore proceed cautiously. The election results, due on October 8, may impact the market in the coming week, and announcement of sixmonthly results of listed companies could add further selling pressure, especially if the performance is weaker than anticipated. However, companies with strong fundamentals may see their stock prices recover even if they report weaker quarterly results.

The slight fall on Friday can be attributed to profit-booking, which is a normal market phenomenon after significant gains. The confidence of both foreign and domestic institutional investors (FIIs and DIIs) remains high, as evidenced by their continued buying. FIIs have purchased shares worth Rs 22,403.72 crore, while DIIs have bought Rs 24,211.50 crore worth of shares in September so far. This suggests that market is likely to see new highs in future.

The BSE index gained 1,027.54 points (1.22%) last week, and the Nifty index improved by 388.00 points (1.50%). Midcap & smallcap indices showed mixed trends, with midcap stocks experiencing some growth, while smallcap stocks remained relatively stable in BSE but declined in NSE. In the bullion market, gold prices in Jaipur increased by Rs 1,150 to Rs 77,350 per 10 grams, and silver prices rose by Rs 1,550 to Rs 92,800/KG.

This week, traders expect profit-booking due to technical reasons, including international tensions and the upcoming Monetary Policy Committee meeting of the Reserve Bank of India. Other factors like the high valuation of Indian shares and the large number of IPOs entering the market are contributing to the anticipated weakness. Additionally, from October 1, the marginal increase in share trading fees on BSE and NSE will come into effect, potentially putting psychological pressure on the market.

Investors should watch specific stocks in sectors like sugar and real estate, as traders consider them safe following the government’s announcement of ethanol rate increases. Stocks in companies like Optimus Finance, Tata Technology, Zomato, and Indian Hotels are seen as relatively safe, though they may still be affected by any market downturn. Nine companies are entering the IPO market this week, with Diffusion Engineers Limited and the MSME Platform leading way. However, investors should remain cautious of the high premiums being demanded. This week, eight companies submitted their revised and new draft red herring prospectuses to SEBI, including Highway Infrastructure and Swiggy Limited.

(These are the personal views of the author.)