Bleak Winter! Why analysts are hinting at painful October even after 8 weeks of Nifty correction?

Indian equities entered October battered following one of the most severe monthly sell-offs in years. The Nifty fell nearly 6% in September, marking its eighth consecutive weekly decline and the longest losing streak in 25 years. Foreign investors intensified their sell-offs, crude oil prices remained high, the rupee weakened, and US bond yields surged above 5%. The Nifty lost more than 1,400 points in September, a decline more than any other month in eight years.

Sidharth Sogani Jain, founder and CEO at Blue Aster Capital, noted that September was not a typical correction but a repricing of equities. He attributed the downturn to higher US yields, a strong dollar, elevated crude prices, and a weakening rupee, which make Indian equities less attractive compared to dollar assets. These factors make India more vulnerable to economic pressures.

October is likely to see a stabilisation, but a full recovery will prove challenging. Analysts expect the market to experience volatility, with festival demand, government spending, and the start of the earnings season potentially boosting select sectors like large banks, manufacturers, and domestic consumption. However, foreign money may not return easily.

Paresh Bhagat, chairman of Mangal Keshav Financial, warned that a sustained recovery depends on stabilising oil prices and US bond yields, rather than domestic factors. He suggested that both foreign institutional investors (FIIs) and domestic liquidity will be crucial for a durable rebound.

The next critical period will be the second quarter earnings, where analysts will closely monitor top-line growth, margins, and management commentary. While crude oil prices, geopolitical events, and weak monsoon conditions in certain regions could pose risks, a more positive November-December recovery may be possible, albeit selective and earnings-driven.