Sensex rises 1,017 points, but here's what to expect

After a sharp fall in September, a recovery in domestic stocks looks likely. If one goes by the historical data, this is if one goes by it. The BSE Sensex rallied 1,017 points, or 1.08 per cent, to 57,426 on Friday. The 30 pack index settled down 2,110 points or 3.54 per cent, down 2,110 points or 3.54 per cent.

At least in the 10 past instances, the data shows that October has been a strong month for equities. The BSE Sensex has delivered positive returns in eight of the last 10 Octobers, according to data from the corporate database AceEquity. The average return for the 30 pack index was 2.62 per cent during the period.

In October 2021, the BSE barometer delivered returns of 0.31 per cent, 4.06 per cent in October 2020 and 3.78 per cent in October 2019.

It fell by 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 Sensex delivered positive October returns in 10 instances, even though the Sensex ended lower for the month in 2012, down 1.37 per cent.

The worst October for Sensex in the 15 year period was 2008 when the index plunged 23.89 per cent during the height of the global financial crisis. The biggest October month return during the period was 14.73 per cent, in 2007 at 14.73 per cent.

The coming month is going to be eventful, according to analysts.

Ajit Mishra of Religare Securities said quarterly earnings will definitely be on investor radar, but stability in global markets will also be important. Our markets had been outperfoming global markets for a long time. The key Indian indexes were just 3 per cent closer to all-time highs a month ago, while the US markets were down 19 per cent for 2022, just a month ago. Since our market has seen a fall, one would see if the decoupling will continue. One would see if there are new turns in the Russia-Ukraine scenario, Mishra said.

The Dollar index is rising again and flows have reversed. The investors would keep an eye on flow trends, he said.

Foreign investors were net sellers in September to a value of 7,624 crore compared to the inflows of Rs 51,204 crore in August, according to data available with the depository NSDL.

There is clarity on the road ahead, even though there is some fog on the windshield. India's corporate sector is doing well regardless of the short-term challenges. There are segments and businesses that are unaffected by the hawkish Fed, the Ukraine war, the Euro Zone slowdown and the Chinese property market crisis. In an October note, VK Vijayakumar, of Geojit Financial Services, said that common sense tells us that investing and continuing to invest in India would pay rich dividends.