Market in October: Nifty 50 records largest monthly drop in CY23; 35 stocks in the red

Apart from large-cap stocks, mid-cap and small-cap stocks advanced in October, marking a significant reversal of the positive momentum experienced in the previous six months, starting from April to September.

Moreover, the Q2FY24 earnings season also added volatility to the market as major Indian IT companies, including TCS, Infosys, and Wipro, reported September numbers below Street estimates and also trimmed their revenue guidance.

FPIs extended their selling streak in October, pulling back ₹20,300 crore from Indian equities (till October 27) due to spiking US Treasury yields. September marked the beginning of the FPIs turning into net sellers, withdrawing ₹14,768 crore from Indian Ordinary Shares.

This change occurred after a period of continuous buying that began in March and continued until August. During this bullish phase, there was a substantial infusion of FPIs ₹1,68,179 crore into Indian equity, according to the depository’s data.

The Nifty 50 fell 2.84% in October, marking the biggest monthly fall in CY23. From the all-time high of 20,222 points, the index is currently down 6.04%.

35 Nifty stocks ended October in negative territory. Among these, there are 17 stocks, including UPL, Divi Laboratories, Tata Steel, Tech Mahindra, Adani Enterprises, Adani Ports & SEZ, Asian Paints, JSW Steel, Apollo Hospitals Enterprise, Axis Bank, Wipro, Hindalco Industries, Mahindra & Mahindra, Infosys, TCS, SBI, and NTPC saw losses ranging from 4% to 12.3%.

On the other hand, there are 15 stocks, including Nestle, Coal India, Bajaj Auto, SBI Life Insurance Company, HCL Tech, Tata Consumer Products, Ultratech Cement, Bajaj Finserv, Titan Company, Power Grid Corporation, Cipla, HeroMoto Corp , IndusInd Bank, BPCL, and HUL recorded gains within the range of 0.8% to 7.7%.

In terms of sectoral indices, Bank Nifty PSU fell 6.16% in October, registering the biggest monthly fall since February 2023. The Nifty Metal also fell 5.66% in October, followed by Nifty Pharma and IT index Nifty, which fell 4.79% and 3.78%, respectively.

From a domestic perspective, the September CPI inflation number came in well below expectations at 5.02% against 6.83% in August.

Volatility continues

Sreeram Ramdas, Vice President at Green Portfolio, PMS said, “We expect Nifty 50 to show a subdued performance for the next month. Looking at the sector exposure, it is mainly towards financials and IT; overall, there is it’s about 51%.”

“The implementation of IT orders is being postponed, which is reflected in the results of the IT sector. As companies in the west cut back on spending, we expect IT to experience some stagnation. On the financial side, we’ve already seen peak net interest margins, and they’ve started to come down,” he said.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “As the ground war in Gaza intensifies, the uncertainty surrounding the West Asian crisis is at its peak. We do not know now how and when this war will end and what will be Therefore, investors should continue with a cautious strategy.

He said the spike in US bond yields has had a bigger impact on equity markets around the world than a war between Israel and Palestine. The US 10-year bond yield above 4.9% will continue to be a major driver for stock markets, especially those in emerging markets, he noted.

He added that the ongoing selling by FIIs is likely to continue to pressure markets. He points out that the sharp drop in Brent crude oil to $85 is a positive for India, and expects aviation, paints and tire stocks to respond positively to this news.

“Investors can look at the trends in quality large caps like Maruti, ICICI Bank, HDFC Bank, RIL, ITC, and L&T, which have achieved good Q2 results. These companies have good earnings visibility and, therefore, substantial institutional witness. buying when normality returns,” he said.

Disclaimer: The opinions and recommendations of the individual analysts presented in this article are. These do not reflect the views of the Mint. We encourage investors to check with certified experts before making any investment decision.

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Updated: 01 November 2023, 04:19 PM IST