The Nifty 50 index experienced significant fluctuations in October, with a fluctuation of 1,012 points before closing 559 points (or a 2.8 percent MoM decline) lower at 19,080. This marked the steepest month-on-month decline in CY23, according to Motilal Oswal Financial Services.
Several factors contributed to this volatility, including the Israel-Palestine conflict and sharp FII outflows in the last two months, although these outflows were offset by stronger DII inflows. In October 2023, DIIs recorded the highest inflows in the last seven months at USD 3.4 billion, while FIIs experienced outflows for the second consecutive month at USD 2.7 billion.
All major sectors ended lower in October 2023, with PSU Banks (-6 percent), Telecom (-6 percent), Metals (-6 percent), Utilities (-5 percent), and Healthcare (-5 percent) being the top laggards, while Real Estate (+5 percent) was the only gainer. Additionally, key global markets, including India, experienced declines in local currency terms during the month.
While corporate earnings in 2QFY24 have been in line with the performance of heavyweights in sectors like BFSI, O&G, and Automobile, there remain significant divergences in performance between large-caps and mid-/small-caps and across sectors.
The report suggests that sector rotation could be a significant driver of market dynamics in the midst of volatility over the next couple of quarters.
(With Agency Inputs)
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