August was not a great derivatives series; at least it ended on a good note. The Sensex kept its head above the psychologically important 15,000 mark and the Nifty did well to clear 4,400. A very satisfactory end to a rocky series: even so the Nifty and Sensex were down 4.5 per cent apiece during this period.
The September series starts on a much sounder footing. Globally, things are looking much more stable and locally the political clouds have lifted. Statements from the UPA and Left parties indicate a thawing of hard stances. For the moment at least, disaster seems to have been averted. September starts with one baggage less, at least.
Earnings season is still a good five weeks away, so the big potential triggers in September are global. The two central bank meetings: US FOMC on the 18th and ECB on the 6th are crucial. The market has started pricing in a rate cut from the US Fed and the run up to that event would be very interesting. The cause and effect are interlinked. How the markets perform till the 18th may have a bearing on the Fed’s action and what the Fed does would certainly be the pivot for global market performance thereafter.
So while it’s true that we have shown some early signs of snapping our daily correlation with the US market, September does promise to be a ‘global’ kind of month. One hopes the liquidity picture in September will be better: in the August series FIIs took out $2 billion from the cash market. The Yen is behaving itself around the 115 mark and unless there is a surprise on the 18th, some money should flow back this month. We are going in strong into this series but the window of volatility hasn’t been shut out completely.
A new sector, fertilisers, topped the charts in August. Some power and infrastructure stocks did well and may continue to, around the Power Grid IPO that opens on the 10th. Some of the large cap pillars like Reliance, SBI, BHEL and even ONGC are showing strength, which is good news for the index. Autos have seen some accumulation; it would be interesting to see whether these under-performers like auto and technology can show some rearguard action this month.
The market is poised interestingly, after all the turbulence of August. The Nifty is barely 200 odd points away from its all-time high.
Let’s see if the index can climb walls of global worry to scale a new summit. That would be fun.
(The writer is Executive Editor, CNBC-TV 18)