MUMBAI: Rising geopolitical risks, elevated crude oil prices, a weakening rupee and unabated foreign fund selling have combined to force Dalal Street investors on the back foot. As a result, markets are bracing for another volatile week. In addition to the above factors weighing on sentiment, there are talks of renewed military attacks on Iran by the US-Israel combine ahead of the crucial polls in the two countries where the incumbent heads of state are expected to face severe election setbacks.One of the highlights of the week would be the listing of Jio Platforms which on Friday closed the biggest IPO in India ever and is expected to list on Oct 28.
As talks of an escalation in war in the Persian Gulf circulated, Brent crude prices jumped to above the $114 per barrel level on Friday and settled at about the $112 level, levels not seen since May this year. That also weakened the rupee which again inched closer to the 95-to-a-dollar level at close on Friday. The only positive for the week was that foreign funds were net buyers in two of the five sessions.During the week, foreign funds significantly reduced their selling and even turned buyers on two days, said VK Vijayakumar, the chief investment strategist at Geojit Investments. “The moderation in the US bond yields with the 10-year yield declining from 5.36% to around 5%, appreciation in the rupee to 94.94 to the dollar and the low valuations, particularly of the large-caps, contributed to the moderation in FII selling,” he said.Vijayakumar, however, pointed out that in Oct, net selling by foreign portfolio investors (FPIs) in stocks was Rs 53,337 crore while the corresponding figure for the year so far was Rs 3.7 lakh crore (excluding IPO proceeds), the highest ever yearly figure.Friday’s session also saw a sharp slide in midcap and smallcap stocks. And this could be due to forced liquidation in the margin-funded long positions in the market. For long, several of the top market players have been warning about the growing size of the margin trade funding (MTF) book that has doubled in the last two years to about Rs 1.5 lakh crore now.During midweek, Jio Platforms, after its hugely successful IPO of Rs 30,213 crore was subscribed over 22 times, will list on the bourses. In the unofficial market for yet-to-list stocks, speculators are betting on a listing price of about Rs 1,370, a 22% listing gain.
