Whats the reason for yesterday’s 350 points fall in Nifty?

Nifty fell 353 point yesterday i.e. 2% decline in a single trading session? What is the cause of this unexpected and swift correction?

As always, multiple reasons are being touted, after the event has panned out. We try to present and counter some of those, for the benefit of our readers:

1. Market fell due to overbought position, being last date of monthly F&O expiry.

Counter Argument: In that case, markets should bounce back with a vengeance today and thereafter!

2. Ahead of Diwali, a correction was desired, which has come, as it would have been difficult to pull up the stock prices further on, from levels seen about a week back.

Counter Argument: So if this correction is temporary, it is healthy and welcome!

3. Traditionally, November is always bullish month for the Indian stock markets. Astrologically as well, last 2 weeks of October month, always gives unpredictable weakness and volatility, which also comes to an end abruptly, from start of November. So, expect climax to weakness by toay end of the day.
4. FIIs are selling as India valuations have become expensive.

Counter Argument: But, Indian markets have matured to counter FII selling with domestic buying, both retail and institutions, flush with funds, due to lack of attractive investment alternates.

5. FIIs need money to invest in big-ticket tech-driven IPOs of over Rs. 5,000 cr each of Nykaa and Policy Bazaar open/opening over the next 2 days.

Counter Argument: If this is the kind of selling witnessed for Rs. 11,000 cr worth IPOs, what is expected when Rs. 18,300 cr IPO of PayTM opens up post Diwali? We are not even talking of what happens when NSE or may be LIC IPOs are launched.

Thus, there can be multiple reasons. And fall and rise are part of the game. Thankfully, most of our members remained calm amidst yesterday’s panic, as most avoid F&O and keep a balanced portfolio of large, mid and small cap stocks, with limits to individual stock holdings as well.

PS: We are not seeing Change of trend or Reversal or End of Bull phase, or start of Bear market. Instead, we are expecting bullish November, with Nifty to kiss 18,500 in November, led by IT, Telecom, Cement & Bank stocks.