Sensex gains 4,000 points in October: Hold or book profits?
What's the story
The Indian stock market has witnessed a remarkable recovery this October, with the Sensex gaining over 4,000 points. The surge is largely attributed to foreign institutional investors (FIIs) reversing their previous selling trend and investing more than ₹7,300 crore into Indian equities. This has brought the benchmark index within striking distance of its all-time high of 85,978. Meanwhile, Nifty is just about 410 points away from its record high.
Rally analysis
Nifty Bank surges over 6% this October
The market rally has largely been led by frontline stocks, with Nifty Bank surging over 6% this October. Midcap and smallcap indices have also seen moderate gains of 3-4%, indicating that the broader market is still in a recovery phase. The recent performance of these indices suggests that while the market is recovering, it may not be fully in a bull cycle yet.
Growth expectations
Earnings growth expected to improve from FY26
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that the sharp decline in India's earnings growth to 5% in FY25 was the main reason behind the previous underperformance. However, with early festive-season sales of automobiles and white goods showing robust growth, he expects earnings growth to rise to 8-10% in FY26. This could accelerate further to 15% in FY27.
Market projections
Ventura Securities sets bullish targets for Nifty, Sensex
Vinit Bolinjkar, Head of Research at Ventura Securities, has set a target of 27,600 for Nifty and 90,100 for Sensex this year. He believes that the weak FY25 earnings trend seems to be bottoming out. Factors such as domestic consumption-driven earnings, a possible US-India trade deal, and continued fiscal and monetary support could further boost market performance during this festive season.
Investor sentiment
FIIs return as net buyers in October
After three months of selling stocks worth ₹76,600 crore, FIIs returned as net buyers in October with inflows of ₹7,300 crore. Alok Agarwal, Head-Quant and Fund Manager at Alchemy Capital, highlighted that the current underweight stance on India could reverse given stabilizing earnings and an attractive risk-reward scenario. This shift in investor sentiment is expected to further fuel the market's bullish momentum.