Nifty 50: As Diwali approaches, the Nifty 50 index has hit a rough patch, marking its worst performance in a decade for the pre-festive season. In October alone, the index has plummeted nearly 6%, while the Sensex has lost over 4,800 points, leaving new retail investors grappling with a sea of red in their portfolios. Historically, October has been challenging for bulls, but this year’s downturn stands out, with many analysts wondering if this presents a lucrative buying opportunity.
This October’s performance is particularly stark when compared to the past decade. Since 2014, the Nifty has recorded negative returns in only four pre-Diwali months, with an average return of 0.84%. The worst was in 2015, with a 4.45% decline. The current sentiment has been driven by foreign institutional investors (FIIs) pulling out approximately ₹86,000 crore amidst shifting investments towards China, while domestic institutional investors (DIIs) have offset some of this with ₹93,000 crore in inflows.
Market experts are urging caution, particularly as analysts predict ongoing volatility until there are clear signs of a rebound in consumption and earnings growth. The earnings forecast for Nifty50 remains modest, with growth expectations barely in double digits. “If earnings disappoint, we could see further market corrections,” warns Sorbh Gupta, Senior Fund Manager at Bajaj Finserv AMC.
Despite the negative sentiment, some analysts suggest that this correction could be a good entry point for long-term investors. Hemang Jani, a veteran on Dalal Street, believes the market may be nearing a bottom, with potential for a base formation in the coming weeks. The focus is shifting from momentum to quality stocks, which might help stabilize the market in the longer term.
Moreover, recent earnings reports from major companies like HDFC Bank, Reliance Industries, and Axis Bank have exceeded expectations, hinting at resilient corporate fundamentals despite broader market challenges. HDFC Bank’s net profit rose 5% year-on-year, while Reliance Industries saw a notable increase in revenue from its telecom arm, Reliance Jio. These results reinforce confidence in India’s economic recovery, appealing to both domestic and foreign investors.
Looking ahead, as the earnings season progresses and festive consumer sentiment rises, market participants are urged to maintain a cautious outlook while keeping an eye on potential upside opportunities. The prevailing advice suggests adopting a “buy on dips” strategy while being mindful of overvalued sectors.
As market dynamics evolve, the Nifty 50 remains a key focus for investors, with upcoming trading sessions likely to be influenced by global cues and domestic economic data
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are encouraged to conduct their own research and consult with a financial advisor before making investment decisions. Past performance is not indicative of future results, and investing in the stock market involves risks, including the potential loss of principal.
