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India's Nifty 50 and S&P BSE Sensex experienced their most challenging month in October 2023. The Nifty 50 dropped 0.32% to close at 19,079.60, while the Sensex fell 0.37% to 63,874.93, marking a nearly 3% loss for each index during the month. This decline was driven by multiple factors.
The U.S. Federal Reserve's stance on maintaining higher interest rates for an extended period has led to multi-year highs in U.S. Treasury yields, making them more attractive to investors and causing a sell-off in other markets, including India.
FIIs pulled out a substantial ₹22,850 crore from Indian equities, influenced by the surge in U.S. Treasury yields. This sell-off followed a period of substantial investment from March to August, highlighting a shift in FII behavior towards Indian stocks.
Major IT companies in India like TCS, Infosys, and Wipro reported earnings below expectations and trimmed their revenue forecasts, attributing to a sector-wide performance dip with the Nifty IT index dropping by 3.78% for the month.
The Nifty PSU Bank index fell by 6.16%, the largest monthly decline since February 2023. Other sectoral indices such as Nifty Metal and Nifty Pharma also saw significant declines.
Despite the overall negative trend, some stocks did manage to post gains. Fifteen Nifty stocks, including Coal India, Bajaj Auto, and HCL Tech, saw positive growth, with Nestle India emerging as the top performer with a 7.7% gain.
In light of these events, market analysts have suggested a cautious approach, advising investors to keep an eye on high-quality large-cap stocks with strong earnings visibility, which are expected to attract significant institutional buying once market stability returns.
