Market Performance Summary – October 2026
Overview:
- Benchmarks recovered, led by IT: The Nifty 50 rose 1.91% to 23,053.10 and the BSE Sensex gained 2.73% to 74,459.53, ending a two-month losing streak. The rally was narrow: IT rose 17.7%, its best month in over six years, on strong Q2 results, while Metal fell 7.5% and was the weakest sector.
- The broader market kept falling: Large caps held up but mid and small caps did not. The Nifty 100 gained about 1%, while the Midcap 100 fell 3.42%, the Midcap 150 fell 3.7%, the Smallcap 100 fell 4.06% and the Smallcap 250 fell 5.81%. The money that did come into the market went into large, liquid stocks, as the next section explains.
- Jio Platforms listed: Jio Platforms listed on October 28 at ₹1,358, a 21.36% premium to its IPO price of ₹1,119. The ₹30,213 crore IPO valued it at about ₹12.5 lakh crore, making it India’s second-most valuable listed company.
What Changed?
- Oil and geopolitics kept the pressure on: Brent’s expiring December contract rose about 14% to $117.64 from $103.2 in September, its fourth straight monthly gain, as attacks on Saudi oil infrastructure and the Strait of Hormuz raised supply risks. That is why India VIX rose to 15.3 from 13.5 even as the indices gained.
- Higher oil fed into inflation and RBI policy: September CPI rose to 5.54% from 4.83%, with food inflation at 7.74%, and WPI inflation rose to 11.39%. The RBI responded with a 25 bp hike to 5.50%, its first since February 2023, and moved to a “calibrated tightening” stance. It raised its FY27 inflation forecast to 5.2% and its GDP growth forecast to 7.1%. Growth is moderating but still healthy: September IIP grew 6.7%, down from a revised 7.8% in August.
- Domestic bond yields rose: The rate hike and tighter liquidity pushed India’s 10-year yield to 7.41% from 7.18%, after it touched about 7.48% during the month. The average banking liquidity surplus fell to ₹2.4 lakh crore from ₹7.8 lakh crore in September.
- Global rates offered some relief: The Fed held rates at 3.75–4.00% on October 28, but two members wanted a hike, making it a hawkish hold. The US 10-year yield still eased to 4.94% from 5.2–5.3% in September, after peaking at 5.31% during the month. Lower US yields helped IT stocks and eased pressure on emerging markets.
Currency & Institutional Flows
- Rupee: The rupee strengthened to ₹94.95 per dollar from ₹95.8 at the end of September, helped by RBI measures to curb dollar demand and by market intervention.
- FIIs sold for most of October but turned buyers at the end: FIIs were net sellers of ₹45,162 crore in the cash market, slightly more than September’s ₹44,013 crore. Depository data showed FPI equity outflows of ₹34,843 crore, a second straight month of withdrawals, which took 2026 outflows to about ₹2.95 lakh crore, already above the full-year record set in 2025. The trend reversed in the final week, with FPIs investing about ₹6,300 crore between October 26 and 30.
- DIIs absorbed the selling: DIIs bought ₹62,220 crore, down from ₹76,030 crore in September but still enough to more than offset FII selling.
Early November: FII buying lifts the Nifty above 24,000
- FII buying has accelerated: FIIs have been net buyers for four straight sessions, buying ₹20,834 crore in total:
- DIIs, by contrast, were net sellers of about ₹7,783 crore in November so far, as they booked profits.
- The Nifty crossed 24,000: On November 5 the Nifty crossed 24,000 for the first time since September 4, rising as much as 2% to an intraday high of 24,442.20. The rally was driven by sustained FII buying, the sharp fall in crude after the Democrats won the US midterms raised hopes for an end to the West Asia conflict, and a stronger rupee, which opened at 94.35 per dollar.
Sector Performance:
| Sector | Return | What Drove It? |
| IT | +17.69% | Best sector and its best month in over six years, reversing September’s 11.18% fall. Strong Q2 results from TCS and HCLTech, low valuations and easing US yields drove the rally. |
| Media | +3.03% | One of the few gainers, led by steady gains in Zee Entertainment. |
| Pharma | +2.60% | Rallied about 6% in the last week of the month on strong Q2 results and a move into defensives. |
| Healthcare | +1.93% | Recovered late in the month along with pharma as investors moved into defensives. |
| Financial Services | +0.25% | Flat. Banks held steady, but NBFCs fell; Shriram Finance dropped about 16%. |
| Bank | +0.10% | Flat. The RBI’s 25 bp hike to 5.50% and continued FII selling capped gains. |
| FMCG | –2.02% | Rising input costs and weak Q2 results from Nestle and HUL weighed on the sector. |
| Oil & Gas | –2.93% | Brent rose about 14% to near $118, raising cost pressure on oil marketing companies. |
| Auto | –3.31% | Rate-sensitive stocks fell after the RBI hike, despite healthy festive-season registrations. |
| Metal | –7.65% | Worst sector of the month. Profit-booking after a strong rally, plus weak global metal prices and uncertainty over Chinese demand. |
Key Economic Highlights:
| Indicator | Latest Data | The Bottom Line |
| Manufacturing PMI | 54.7 | Eased from 55.1 in September, as output and new orders grew more slowly. |
| Services PMI | 55.8 | Up from 55.2, a four-month high. Services input-cost inflation eased to its lowest since August 2020. New export orders grew at the slowest pace since February 2023. |
| Composite PMI | 56.2 | Up from 55.9, the strongest private-sector expansion in four months. |
| GST Collections | ₹2.31 lakh cr | Up 22.9% YoY, the fastest growth in more than four years. Net collections rose 25.6% to ₹2.03 lakh crore. |
| Auto Sales | Record 5 lakh+ PVs | Domestic passenger vehicle dispatches crossed 5 lakh for the first time, on strong festive demand. Maruti posted its highest-ever monthly sales of 2,76,120 units, up 25%. |
| US ISM Manufacturing PMI | 55.5 | US factory activity expanded for the 10th straight month. |
| US Midterm Elections | Democrats win both chambers | Democrats won the Senate and the House (both called by AP), which points to gridlock for the rest of Trump’s term. The Dow jumped about 1,500 points for its best day since April 2025. The US 10-year yield fell to about 4.88% and the dollar weakened, as markets priced in lower deficit spending. |
Fundamental Outlook:
- Earnings: Q2 FY27 results have been better than expected, with the first 35 Nifty companies reporting 22% YoY earnings growth against expectations of 20%. FY27 Nifty EPS estimates have been revised upwards by 1.1% to ₹1,247, with overall earnings growth expected at around 15%. However, margin pressures remain in select sectors due to higher input costs.
- Inflation and rates: September CPI rose to 5.54%, with food inflation at 7.74%. The RBI raised the repo rate by 25 bps to 5.50% and shifted to calibrated tightening. The 10-year yield rose to 7.41% in October before easing to around 7.22% in November. Higher inflation and borrowing costs remain concerns.
- Oil and global factors: Brent rose 13.6% in October to $117.64 before declining to around $103.60 on November 3 amid hopes of a US-Iran agreement. Sustained crude prices above $100 remain a risk to inflation and corporate margins. The US Fed held rates at 3.75–4.00%, while US bond yields eased to around 4.88%. FII selling remains a concern.
- Domestic economy: Q2 GDP growth is estimated at 7.35%, following 7.8% in Q1. October GST collections rose 22.9% to ₹2.31 lakh crore, while passenger vehicle dispatches crossed 5 lakh units. Services PMI improved to 55.8, manufacturing PMI moderated to 54.7 and September IIP growth slowed to 6.7%.
- Markets: Nifty recovered to 23,960.60, up 3.9% from October-end. Its trailing PE is around 19.8x and forward PE around 17.2x. However, the recovery remains concentrated in select large caps, while mid and small-cap valuations remain relatively elevated, making stock selection important.
- Key monitorables: US-Iran developments and crude prices, October CPI, RBI policy, US Fed policy, Q2 GDP, corporate earnings and FII flows.
Technical Outlook:
- Trend has improved: Nifty closed at 23,960.60, marking its fifth consecutive gain and recovering nearly 4% from October-end. It is trading above its short-term EMAs and the 61.8% Fibonacci retracement level of 23,786, indicating improving momentum.
- Derivatives are less bearish: FIIs have reduced their net short positions in index futures to around 1.86 lakh contracts from over 3 lakh in early October. Their long share in index futures has also improved, indicating a gradual improvement in positioning.
- Key levels: 24,000 to 24,050 is the immediate resistance. A sustained move above this can take Nifty towards 24,217 and then 24,774. Supports remain at 23,700 and 23,500, with 23,300 as the stronger support zone.
- Volatility remains moderate: India VIX declined to 15.19 but remains around 60% higher year to date. The index is approaching overbought levels, making a pause near 24,000 possible. Crude prices, October CPI, Q2 earnings and FII flows remain key near-term triggers.
US Market Outlook:
- Fed maintains a cautious stance: The Fed kept interest rates unchanged at 3.75%–4.00% in its October meeting. However, inflation remains a concern, with September CPI rising to 3.7%. While employment data has been mixed, the improvement in private-sector hiring indicates some resilience in the labour market. The possibility of a December rate hike remains a key concern.
- Midterm elections bring policy clarity: Democrats secured control of both the House and Senate, increasing the likelihood of policy gridlock and limiting major fiscal changes. Markets reacted positively on November 4, with the Dow rising 3.03%, S&P 500 gaining 1.58% and Nasdaq advancing 1.44%.
- Technology stocks face pressure: The Nasdaq-100 entered correction territory on November 2, falling over 10% from its October high. Concerns around elevated AI valuations, heavy data-centre investments and uncertainty over future returns have weighed on technology and semiconductor stocks.
- Corporate earnings remain strong: Q3 earnings have been encouraging, with around 82% of reported S&P 500 companies beating earnings expectations. Overall earnings growth stands at approximately 30.2%, with growth broadening beyond the largest technology companies.
- Valuations have moderated: The S&P 500 forward P/E has eased to around 18.3x following the recent correction. Strong earnings growth has helped improve valuations, although the market is not yet inexpensive given elevated interest rates and ongoing uncertainties.
- Key risks to monitor: Persistent inflation, the possibility of another Fed rate hike, elevated bond yields and volatility in AI-related stocks remain key concerns. Brent crude has declined to around $95 per barrel amid hopes of progress in US-Iran negotiations. The upcoming US employment and inflation data will be important in determining the near-term market direction.
Gold Outlook:
- Domestic prices remain volatile: Gold and silver have corrected over the past month, with 24K gold around ₹1.43 lakh per 10 grams and silver around ₹1.87 lakh per kg. However, prices have shown a recent recovery, supported by a weaker US dollar and easing oil prices.
- Higher interest rates remain a headwind: Persistent US inflation, elevated Treasury yields and expectations of a possible December Fed rate hike have weighed on gold. Since gold does not generate interest, higher bond yields and a stronger dollar reduce its relative attractiveness.
- Central bank buying provides support: Central banks purchased 321 tonnes of gold in Q3, up 42% year-on-year. Continued central bank accumulation, along with physical demand from India and China, provides support to prices despite near-term volatility.
- Outlook: Gold’s near-term direction will largely depend on US inflation and employment data, Fed policy, dollar movement and developments in the US-Iran conflict. Lower oil prices and expectations of fewer rate hikes could support gold, while stronger economic data and a hawkish Fed stance may put further pressure on prices. The longer-term outlook remains supported by central bank buying and demand for safe-haven assets.
Final View
- Market headwinds are gradually easing: The recent correction was largely driven by higher crude oil prices, rising US bond yields, a stronger dollar and foreign investor selling. Some of these pressures have started to ease, while domestic economic growth remains resilient. This indicates that the correction was largely driven by global factors rather than a deterioration in India’s fundamentals.
- Earnings outlook is improving: Q2 results have been encouraging, with early signs of an improvement in earnings growth and a possible end to the downgrade cycle. Earnings are likely to play a greater role in driving the next phase of the market. However, performance remains uneven across companies, making stock selection important.
- Large caps offer slightly better risk reward: Large cap valuations are relatively attractive compared with their historical averages, while mid and small caps continue to trade at higher valuations with weaker market breadth. We therefore prefer quality large caps, where the balance between valuations, earnings visibility and risk is more favourable.
- Key risks remain: Crude oil remains a major swing factor, particularly given the uncertainty around US-Iran negotiations. Persistent inflation, interest rate expectations in India and the US, and continued foreign investor outflows could also lead to further volatility.
- Our view: We remain constructive on the market and recommend staying invested. Improving earnings visibility and relatively reasonable valuations provide support to the market outlook. However, given the possibility of near-term volatility, we prefer a staggered investment approach rather than aggressive lump-sum deployment. Our preference remains quality large-cap companies, while maintaining selective exposure to mid and small caps until valuations and market breadth improve.
Investors are advised to consult their financial advisors before making any investment decisions. This view does not constitute investment advice.
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