‘Spectacular September’ is how market players and traders have hailed the month which saw the Government shake off its policy stasis causing the equity markets to perk up.

Trudging to office for broking firm employees is no longer drudgery. The mood in the market is one of optimism and renewed excitement.

For those dealing in the equity market, the last two weeks have seen a sharp turnaround in sentiments. From lugging themselves to work with very little to look forward to, market players say that employees are now reporting early to work.

The month of September was ‘spectacular’ from the point of view of reform measures being announced both domestically and globally.

Various measures

The Euro Zone made the first move when the European Central Bank announced the unlimited bond-buying programme. The Federal Reserve of the US followed suit and approved the Quantitative Easing (QE3) in a bid to boost its economy.

The Indian Government, on its part, introduced a slew of measures, including opening up foreign direct investment in aviation, multi-brand retail, non-news broadcasting, capping subsidies on cooking gas and raising diesel prices. This brought back investor confidence and revived the investment process.

This new dose of optimism was captured in the equity markets with the BSE Sensex climbing about eight per cent to end closer to the 19,000-mark after 14 months.

Third best of year

So far, in the calendar year, September has been the third best month for Sensex, after January and June. The Sensex moved up 11 per cent in January this year, while June saw it rise by nine per cent. In all, the Sensex has risen 21 per cent in this calendar year.

Calling this euphoria the ‘Sensex syndrome’, Jagannadham Thunuguntla, Strategist & Head of Research at SMC Global Securities, said mood swings in the market are highly correlated to Sensex. “The scenario has changed. People are more confident. This is an excellent cocktail of global liquidity and local reforms.”

Confidence Percolating

In the month of September alone, FIIs were net buyers at Rs 20,827 crore whereas the figure for the calendar year stands at Rs 73,892 crore. In calendar year so far, FIIs were net sellers in only two.

“The FIIs confidence is coming back into the market and percolating down to local players. Though markets are now waiting for further triggers, we believe that this is the start of a sustainable bull-run,” said Satish Menon, Executive Director, Geojit BNP Paribas Financial Services.

While the FIIs have been investing, the domestic institutions largely stayed away. Domestic institutions have been net sellers of shares worth Rs 38,198 crore on BSE and NSE. They sold about Rs 9,159 crore in September alone.

Retail investors sold shares worth Rs 791 crore in September and Rs 4,145 crore through the year on the BSE.

Retail investor participation has increased, said analysts. Those who were looking for an exit have found one and those looking to enter are slowly coming in.

However, retail investors are known to return to the market at the last stage and suffer losses. This time around, they said, hopefully the rally would sustain long enough to change this trend.

> sneha.p@thehindu.co.in

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