Nifty crashes 6.2% in October, steepest decline since March 2020
The Nifty 50 has seen a sharp fall of 6.22% to settle at 24,205 in October, its worst monthly fall since March 2020. The drop was driven by multiple factors such as worries over slowing earnings growth for the September quarter, high valuations, and continued selling pressure from foreign portfolio investors (FPIs). Geopolitical tensions in the Middle East and uncertainty over the upcoming US presidential election also added to the fall.
Indian markets underperform amid global gains
While most Asian markets including Japan and China ended October positively, the Indian markets witnessed steep declines. The US markets are also likely to close the month with healthy gains. This contrast highlights the unique challenges faced by the Indian market during this period. A trend was observed where companies that met or exceeded earnings expectations saw their stock prices soar, while those falling short experienced substantial sell-offs.
Nifty 50's downturn impacts broader market
The October downturn has corrected 8% from its peak of 26,277, which was reached in late September. This has caused 34 constituents of the index to drop between 10% and 38% from their recent one-year highs, according to Trendlyne data. The broader market was also impacted with both Nifty Midcap 100 and Nifty Smallcap 100 falling by 6.72% and 3%, respectively, in October.
Sector-wise performance and FPIs's role
Among the sectors, the FMCG index saw the worst performance, crashing by 10%, its biggest monthly fall in six years. The Nifty Realty index also took a major hit, crashing by 9.3%, its worst monthly fall since March 2020. FPIs pulled out a record ₹1.08 lakh crore from Indian equities in October, Trendlyne data showed. This is the highest monthly outflow, beating the previous record of ₹65,816 crore during the COVID-19 pandemic in March 2020.
