October Markets Wrap – Up

Markets in October 2023

The Indian stock markets have witnessed a decline following their peak in mid-September. Both the NSE Nifty 50 and Sensex indices have nearly lost 3% of their value in October. This decline can be attributed to elevated US interest rates, which have prompted continuous selling by foreign investors. Additionally, the rise in oil prices resulting from the conflict in West Asia has further added to the selling pressure, making global markets quite volatile. Presently, the NIFTY 50 is grappling with a range between 19200 and 19500 due to the tense global situation and mixed signals from both global and domestic factors.

US treasury bonds

On October 23, the yield on ten-year US government bonds, which serves as a global benchmark for asset prices, reached 5.02%, marking its highest level since July 2007.

This increase is intended to raise the borrowing costs for both individuals and companies. When these bond yields rise, foreign portfolio investors tend to divest from their holdings in emerging markets and redirect their investments towards US bonds. This shift in investment is the primary reason for foreign portfolio investors withdrawing their funds from the Indian stock markets. Additionally, even domestic hybrid investors may opt to reallocate their funds from equities to debt, which exerts further selling pressure on the stock market.

Israel – Hamas War

The incursion against Israel by the terrorist group Hamas on October 7th marked the beginning of another chapter in one of the world’s longest-running conflicts.

It’s important to note that the potential involvement of other oil-supplying nations in the conflict could lead to a significant disruption in the global oil supply. This disruption could result in a reduction of the global oil supply by millions of barrels per day, consequently driving oil prices higher. Higher oil prices can have a severe impact on economies worldwide, and every dollar that oil prices increase causes more economic hardship.

Rise in SIP accounts

Gross account registration in the Systematic investment plan (SIP) category of mutual funds reached a record 3.7 million in September 2023.

The new account openings have been above the three million mark for the past three months and the total number of such accounts has crossed 70 million. The SIP inflows were equally upbeat and recorded an inflow of Rs 16,042 crore and the SIP linked funds saw inflows of around Rs 1.7 Lakh crores in the past 12 months.

Bank of Baroda Fraud

On the 10th of October, the Reserve Bank of India (RBI) banned Bank of Baroda from onboarding any new clients on their mobile banking app, “BOB world.”

The reason for this action was that the bank’s agents had covertly withdrawn Rs 22 lakhs from their customers’ accounts. Many staff members downloaded a list of bank accounts that were not linked to any mobile numbers. They then proceeded to input their own mobile numbers or those of individuals they knew, signing up for BOB world to meet their targets. However, a few of these agents took it a step further and stole money from such bank accounts. Now that the RBI has taken notice of these activities, the bank is required to undergo a cleanup and address the issue.

Power Stocks get a Shock

In the month of October, foreign portfolio investors withdrew investments worth $1.42 billion. This selling pressure was primarily driven by the increase in US bond yields and the escalating tension in West Asia.

Additionally, in the month of October, foreign portfolio investors also divested from the construction and IT sectors. However, it’s important to note that there was a net inflow into sectors such as telecommunications, textiles, construction materials, and a few others during the first half of the month.

FY24 Q2 Reports out

The reports for the second quarter, covering July to September 2023, have been released. While there were some positive aspects, there were also a few disappointments.

Notably, major Indian IT companies have reported lackluster earnings, largely attributed to the ongoing macroeconomic uncertainties. Adani Enterprises, in particular, witnessed a decline in their consolidated revenues and reported profits when compared to the previous period. In contrast, Tata Motors, a prominent player in the automobile industry, reported a net profit of Rs 3674 crore for the second quarter of FY24.

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