It doesn't take much to figure out why the market behaved the way it did in October. After all, foreigners pulled Rs 28,921 crore from domestic stocks last month, marking the biggest monthly outflow from equities in at least 18 years.
Th shadow banking crisis brought about by the IL&FS default and the resultant liquidity crunch, simmering oil prices, swelling current account deficit, a faltering
rupee, global trade tension and rise in US borrowing costs only added to the selling momentum in whole of October.
The result? The BSE
Sensex gave up 1,785 points, or 5 per cent at 34,442 in October while the NSE
Nifty lost 543 points, or 5 per cent.
Benchmark equity indices also had their worst October fall in nine years. In October 2009, the BSE barometer had come off by 7.18 per cent.
October's equity outflow is much higher than the Rs 10,824 crore net FII withdrawal in September. FIIs were net buyers to the tune of Rs 3,055 in October last year.
Investors got poorer by Rs 6.41 lakh crore in October as market capitalisation of BSE-listed firms shrank to Rs 138.45 lakh crore as of October 31, from Rs 144.86 lakh crore as on September 28.
But amid all this, there were pockets of hope. On the BSE500 index, shares of
Adani Power rallied 93 per cent despite the heavy selloff last month, followed by Balrampur Chini Mills (up 50 per cent), Oriental Bank of Commerce (30.59 per cent), Sterlite Technologies (29 per cent), Vinati Organics (29 per cent), HEG (28 per cent),
Power Finance Corporation (25 per cent).
On the other hand, 8K Miles, Kwality, Infibeam Avenues, J Kumar Infra,
Bombay Dyeing, and Dilip Buildcon slumped up to 65 per cent during the same period.
Porinju Veliyath, founder and CEO, Equity Intelligence India, in a tweet said, “Q2 rocking, much more in the pipeline - the full impact of reforms (DeMon, GST, IBC etc) will take time, but we are on the right track. Good time for new investors to build a portfolio. An ideal time to start SIP.”
Sectorwise, the BSE Oil and Gas index tanked 10.83 per cent last month. BSE Auto, IT, Teck, Metal and FMCG too lost 3- 8 per cent during the same period. However, the BSE Consumer Durables, Bankex, Power and Capital Goods gained weighed weight between 0.04 per cent and 2.25 per cent.
What is road ahead for the next 12 months? Nitasha Shankar, Executive Vice President – Research, YES Securities, said: “Sectors that should do well include those that directly and indirectly connect with domestic consumption and affordable housing, IT and pharma. Sectors which could remain under pressure include oil and gas, PSU banks and NBFCs.”