Nifty50, Sensex suffer biggest monthly decline of 2023 in October
In October, the benchmark indices Nifty50 and Sensex saw their worst monthly decline of 2023, dropping over 2.84% and 3%, respectively. Indian stocks were impacted by several factors such as the ongoing Israel-Palestine conflict, foreign institutional investor (FII) outflows, increasing US bond yields, and a strengthening US dollar. This downturn also affected mid-cap and small-cap stocks severely, reversing the positive trend observed from April to September.
FIIs withdraw from Indian equities
Throughout October, FIIs continued to sell off, pulling out Rs. 22,850 crore from Indian equities due to surging US Treasury yields. This came after a period of consistent buying from March to August when FIIs poured Rs. 1,68,179 crore into Indian equities. The shift to net selling began in September, with FIIs withdrawing Rs. 14,768 crore from Indian equities.
IT companies report below-estimate earnings
The Q2 FY24 earnings season brought additional market volatility, as major Indian IT firms like TCS, Infosys, and Wipro reported lower-than-expected quarterly results and reduced their revenue forecasts. As told to LiveMint, Sreeram Ramdas, Vice President at Green Portfolio, PMS, noted, "Execution of the IT order books is being postponed, which is being reflected in the IT sector's results. As western companies cut back on spending, we expect IT to go through some stagnation."
Sectoral indices performance
Regarding sectoral indices, Nifty PSU Bank experienced a 6.16% drop in October, marking its largest monthly decline since February 2023. Nifty Metal also decreased by 5.66%, followed by Nifty Pharma and Nifty IT indexes falling 4.79% and 3.78%, respectively.
Gainers and losers
Fifteen Nifty stocks, including Coal India, Bajaj Auto, and HCL Tech, saw gains ranging from 0.8% to 7.7%. On the flip side, 35 Nifty stocks, including UPL, Tata Steel, Infosys, and SBI, ended negatively, with losses between 4% to 12.3%. Nestle India emerged as the top performer in October with a 7.7% gain, while UPL suffered the greatest loss at 12.3%.
Market analysts' views and recommendations
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, as told to LiveMint, recommended that investors maintain a cautious approach due to uncertainties surrounding the West Asian crisis and the effects of rising US bond yields on global equity markets. He advised keeping an eye on high-quality large caps like Maruti, ICICI Bank, HDFC Bank, RIL, ITC, and L&T, which have strong earnings visibility and are expected to attract significant institutional buying once stability returns.
