After a sharp fall in September, a recovery in domestic stocks looks likely. This is if one goes by the historical data. The BSE Sensex ended on a strong note on Friday, rallying 1,017 points, or 1.08 per cent, to 57,426.92. Yet the 30-pack index settled the month down 2,110 points or 3.54 per cent.
Data showed October has been a strong month for equities, at least in the 10 past instances. Out of the last 10 Octobers, the BSE Sensex has delivered positive returns in eight, data compiled from corporate database AceEquity suggests. The average return for the 30-pack index during the period stood at 2.62 per cent.
The BSE barometer delivered returns of 0.31 per cent in October 2021, 4.06 per cent in October 2020 and 3.78 per cent in October 2019.
Also read: Bank of Baroda, SBI and Canara Bank and other PSBs are outperforming the Sensex. What are they doing right?
It fell 4.93 per cent in October 2018, but was up 6.17 per cent in October 2017, 0.23 per cent in October 2016 and 1.92 per cent in October 2015. The only other instance where the Sensex ended lower for the month was 2012 (down 1.37 per cent).
If one takes a slightly longer period of say 15 years, 2007-2021, the Sensex still delivered positive October returns in 10 instances.
The worst October for Sensex in the 15-year period was 2008 when the index plunged 23.89 per cent during the height of global financial crisis. The biggest October month return during the period stood at 14.73 per cent, in 2007.
The coming month will be eventful, said analysts.
Ajit Mishra of Religare Securities said quarterly earnings will definitely be on investor radar, but stability in global markets will also be equally important. “Our markets had been outperfoming global markets for some time. Just a month ago, key Indian indices were just 3 per cent away from all-time highs while the US markets were down 19 per cent for 2022. Now since our market too has seen a fall, one would see whether the decoupling will sustain. One would see if there are new turns in the Russia-Ukraine scenario,” Mishra said.
Also read: Adani Green Energy shares zoom 20%, recover after seven sessions
Mishra said the recent outperformance in India was largely due to a comeback of foreign flows. But now the Dollar index is again rising and flows have reversed. Investors would, thus, also keep an eye on flow trends, he said.
Data available with depository NSDL showed foreign investors were net sellers to the tune of Rs 7,624 crore in September compared with inflows of Rs 51,204 crore in August.
“Even though there is some fog on the windshield, there is clarity on the road ahead. Irrespective of the short-term challenges, India’s corporate sector is doing well. There are segments and companies that are unaffected by the hawkish Fed, the Ukraine war, the Euro Zone slowdown, and the Chinese property market crisis. So, common sense tells us that remaining invested and continuing to invest in India would pay rich dividends,” said VK Vijayakumar of Geojit Financial Services in an October note.