India's Sensex outshines regional indices in October
A bronze bull figurine outside the Bombay Stock Exchange (BSE) in Mumbai.

Asian stock markets outside Japan finished the week higher, India's BSE Sensex leading the pack and the Japanese Nikkei trailing.

For the month of October, the Sensex was the region's outperformer with gains of around 8.5% while the Shanghai Composite was the laggard, losing 1.15%.

Markets opened higher at the beginning of the week, with Australia's benchmark index hitting a record five-year high, after a strong handover from Wall Street helped offset concerns surrounding tight liquidity in China.

Australia's benchmark S&P ASX 200 index struck a new five-year high on 28 October, boosted by financial stocks.

Tim Radford, global analyst at Rivkin Securities said in a note to its clients: "A vacuum of negative news and a reduction in near-term headline risk is helping to support global risk assets, seeing US and Australian equity markets trade to new all-time highs and multi-year highs respectively."

"The market will however shift its attention to the FOMC meeting early Thursday morning, with expectations firmly for the U.S. Federal Reserve to maintain asset purchases at $85bn a month. Given the weakening nature of the US economic recovery and subdued jobs growth there are now calls the Federal Reserve might be inclined to increase asset purchases rather than reduce in the near future," Radford said.

"The recent run higher in equity markets globally is again looking overdone, and a moderate pullback should be expected in the coming days, presenting another buying opportunity for investors," he added.

Markets witnessed mixed trade on 29 October as investors exercised caution ahead of the US Federal Reserve's policy-setting meeting.

Meanwhile, Indian stocks rebounded after the Reserve Bank of India's (RBI) repo-rate hike decision.

India's benchmark BSE Sensex index entered positive territory, crossing the psychologically important 20,000-mark after the central bank raised its policy repo rate by 25 basis points to 7.75%, in line with market consensus.

In addition, the RBI rolled back the liquidity tightening measures introduced in July, reducing the Marginal Standing Facility (MSF) rate by 25 basis points to 8.75%. The MSF has been the effective policy rate since July.

"Monetary and fiscal policy cannot both be accommodative at the same time and have inflation where it is. Hence, the RBI has taken on some of the burden. It's telling you that though growth is so weak, they are still tightening essentially because they see fiscal slippage as a potential risk," said Radhika Rao, economist at DBS.

Elsewhere, in South Korea, government data showed that the country's current account surplus fell to a seasonally adjusted $4.97bn in September, from $7.7bn in August.

In Australia, the local currency shed 0.6% to 0.9510 to the US dollar following Reserve Bank of Australia (RBA) chief Glenn Stevens' comments.

Speaking at Citi's 5th Annual Australian and New Zealand Investment Conference, Governor Stevens said the Australian dollar remained too high and warned that it would be "materially lower at some point in the future".

Markets traded higher on 30 October, and followed Wall Street's record highs, ahead of the US Federal Reserve's monetary policy decision.

In China, the country's money market rates spiked to a four-month high on 30 October. The seven-day repo rate, broadly considered a key measure of confidence to lend in the interbank markets, rose to around 5.59% - a 64 basis points increase over the previous day.

Data from Japan showed that industrial output rose 1.5% month-on-month in September, up from a 0.9% monthly decline in August.

In company news, Hyundai Rotem soared more than 70% on its market debut on 30 October. The Rotem public offering is South Korea's largest share sale in three years.

Elsewhere, Australia's Warrnambool Cheese and Butter Factory (WCB) lost 5% on news that Japanese beverage firm Kirin had acquired a 10% stake in WCB, potentially threatening a bid by Canadian dairy major Saputo.

Markets outside India traded lower on 31 October, and followed a downbeat handover from Wall Street, after the Fed's latest policy outlook was believed to be less dovish than what investors had expected.

However, the Bank of Japan's decision to leave its monetary stimulus programme unchanged provided a little respite to the markets.

The US central bank, unsure if America's economy can sustain itself in the absence of external stimulus, decided to extend its massive monthly bond-buying programme.

Wednesday's decision marks the second time that the Fed has deferred the planned reduction of its bond-buying programme.

Barclays Capital said in a note to its clients: "The information contained in the October FOMC statement was in line with our expectation. The committee made few changes to the statement and appears willing to keep its options open at upcoming meetings. We were looking to see whether the committee preserved the language saying that it decided to await more evidence that progress would be sustained before adjusting the pace of purchases.

"In our view, keeping this statement suggests the Fed is closing in on a decision to taper, but has not seen sufficient evidence to trigger that move yet. A more dovish signal would have been to return to language in the July statement, which said that purchases could be adjusted up or down based on changes in the outlook for labor markets."

Barclays added: "We were not expecting the Fed to provide such a dovish signal and, instead, expected them to remain data dependent and stay on a meeting-to-meeting decision path."

Societe Generale Cross Asset Research said in a note to its clients: "The FOMC seems satisfied with recent progress, and is relieved that some of the risks have failed to materialize. The committee sees the underlying growth (ex fiscal restraint) as having strengthened gradually since the launch of QE.

"Their bias is clearly towards tapering, the only question is when. The Fed has once again decided to wait for more evidence that progress will be sustained before reducing the pace of asset purchases."

The French firm added: "We now see the March meeting as the most likely timeframe for the first tapering announcement. December is not out of the question, but with the October data distorted by the government shutdown, it is unlikely that the Fed will have enough clarity before year-end."

Markets were mixed on the final trading day of the week, when two sets of data from China pointed to expanding factory activity in the world's second largest economy.

The government's official purchasing manager's index (PMI) rose to 51.4 in October, from 51.1 in September, it highest in 18 months. Meanwhile, HSBC's final reading of factory activity rose to a seven-month high of 50.9, unchanged from last week's preliminary estimate.

In India the benchmark BSE Sensex struck a life-time high of 21,294 in intra-day trade and finished 0.15% higher at 21,196.81 points.

Foreign buying worth around $3.5bn, since the Fed decided to defer the planned tapering of its monetary stimulus, supported the rally in Mumbai.

Weekly Market Movements

India's S&P BSE Sensex finished 2.48% higher at 21,196.81.

Hong Kong's Hang Seng ended 2.42% higher at 23,249.79

The Shanghai Composite index ended 0.77% higher at 2,149.56.

Australia's S&P/ASX 200 finished 0.12% higher at 5,411.10.

South Korea's Kospi finished 0.08% higher at 2,039.42.

The Japanese Nikkei index ended 0.29% lower at 14,201.57.

The Week Ahead

China's Communist Party will hold a key meeting of senior party officials on 9-12 November when China's new leaders are expected to detail the nation's economic agenda for the next decade.

Market participants will be tracking trade balance data coming in from China. In addition, they will be tracking non-manufacturing PMI data for the month of October from China.

Elsewhere, the Bank of Japan will release the minutes of its recent monetary policy meeting. The Japanese central bank will also release the results of its monthly economic survey.

Market players will also be tracking Bank of Japan Governor Haruhiko Kuroda's press conference about monetary policies.

The Reserve Bank of Australia will announce its interest rate decision and follow it up with a statement on monetary policy.

The Australian government will put out labour market data for the month of October. Australia will also release third quarter house price index data, alongside retail sales figures for September.