Diwali Means Volatility - Sainik

October has come and gone and was relatively uneventful as far as markets went, except for the last couple of days, when it was volatile. However, the week ahead is full of events which could determine the magnitude and direction of the market.

First off is the RBI policy scheduled for Tuesday and there are expectations now that the RBI would increase interest rates by 25 basis points, unforeseeable just a month ago. This could have some bearing on the automotive and banking sectors.

Next up is US mid-term elections where the Democrats are expected to lose quite heavily. This is likely to create market volatilty in the US markets which could get exported here. Then we have the Big Daddy of them all: The Fed Meeting on 3rd, which would dictate the trends of our markets on Thursday 4th.

The Fed meeting will take a decision on the amount of Quantitative Easing proposal. The quantum of this easing will have profound impact on all the asset markets over the next few months.

To round off the week , we have Diwali coming up, followed by the Obama visit. Traditionally, the Indian markets have been very volatile around Diwali. For instance last year the markets came down for 10 days beginning from Diwali day. However, the previous year, the markets had collapsed about 4 days before Diwali. Whatever may be the case, it has been seen in the Indian markets that eight out of 10 times, if one were to buy plus or minus one week to Diwali, it is profitable.

Let us keep a close watch on the markets . The time for buying may come next week .