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Fifteen of the nineteen sectoral indices have entered correction territory, each down over 10% from their 52-week highs. Notable declines include BSE Metal, FMCG, Consumer Discretionary, and Consumer Durables, all falling more than 13%. Additionally, BSE Bankex and Teck dropped over 5%, while BSE IT and Healthcare saw declines of 4% and 3.8%, respectively.
Indian equity markets have faced significant declines, with the BSE Sensex dropping over eight percent since late September 2024. Contributing factors include disappointing Q2 earnings, ongoing sell-offs by foreign institutional investors, high valuations in mid and small-cap stocks, and rising geopolitical tensions. Financial advisors recommend that investors maintain focus on long-term goals despite current market volatility.
India's market capitalisation experienced its steepest decline since March 2020, dropping nearly 8% in October, primarily due to significant foreign investor sell-offs. The SENSEX and NIFTY fell over 4.7% and 5.7%, respectively, while broader BSE midcap and smallcap indices declined over 6.7%. This decline resulted in a loss of $37 billion, bringing the market cap down to $4.53 trillion, marking the fifth-largest global decline after Belgium, Portugal, Venezuela, and the Netherlands, according to Bloomberg data.
Analysts predict that Samvat 2081 will yield lower returns than the previous year, with 74% believing last year's gains are difficult to replicate. While some sectors may outperform, high valuations from Samvat 2080 could hinder stock performance, necessitating selective stock picking and vigilance for potential gains.
The Sensex and Nifty indices rose over 1%, driven by gains in the financial and energy sectors, with all sectoral indices showing positive movement. Broader market indices also performed well, with the BSE Midcap increasing by 0.7% and the BSE Smallcap up by 1.3%.
Indian equities are facing persistent pressure, marked by a fourth consecutive weekly loss for the BSE Sensex and Nifty50, down 2.24% and 2.7%, respectively. The downturn, attributed to ongoing FII selling and sector-wide declines, has resulted in significant losses across large-cap, mid-cap, and small-cap indices, with every sector ending in the red.
Gold has delivered an average annualized return of about 13.8% over the past 20 years, closely following the BSE Sensex's 14.1%. With the US Federal Reserve cutting interest rates, a weaker dollar is making gold more affordable globally, driving demand. As a safe haven asset, gold remains a reliable hedge against inflation and economic downturns, offering liquidity and stability compared to more volatile securities.
The broader indices continued to underperform, with over 300 small-cap stocks losing between 10-32% amid weak Q2 results, sector-wide selling, and ongoing FII outflows. For the week ending October 25, the BSE Sensex dropped 2.24% to 79,402.29, while the Nifty50 fell 2.70% to 24,180.80, both down 6% for October. The BSE Large-cap, Mid-cap, and Small-cap indices declined by 3.2%, 5.2%, and 7.3%, respectively.
Retail investors are increasingly moving away from large-cap stocks, with a notable reduction in stakes in 27 Nifty50 companies during the September quarter. In contrast, they have raised their holdings in 73 companies within the BSE MidCap Index and 561 in the BSE SmallCap Index, drawn by the potential for high returns despite warnings from market experts about the risks associated with mid- and small-cap investments.
Foreign institutional investors have been net sellers for 18 consecutive sessions, shifting their focus to China due to stimulus measures and better valuations. As of October 24, the Sensex and Nifty remained flat, with FMCG and oil & gas stocks dragging down the indices, while financials attempted to recover. The Nifty has declined nearly 2% in the last three sessions and is down 7% since its record high on September 27, impacted by foreign selling and disappointing earnings.
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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