Indian equity markets showed gains on Friday, with the Nifty 50 index rising by 0.5%. In contrast, the small-cap index experienced a drop of 2%. Over the month of October, the Nifty gained 2%, positioning it as one of Asia’s top major benchmarks and marking its strongest performance against emerging market peers since 2011.
Prominent stocks contributing to the Nifty’s increase on Friday included Trent and IndiGo. In particular, information technology giants Tata Consultancy Services and Infosys played a significant role in boosting the index throughout the month.
Despite a regional downturn in technology stocks linked to the artificial intelligence sector, which saw a decline of around 6% in October, India’s market managed to remain relatively insulated. This resilience is largely attributed to India’s limited exposure to technology hardware and chip manufacturers, as compared to declines observed in Brazilian and South Korean markets.
Sudip Bandyopadhyay, chairman of Inditrade Capital, referred to India’s market conditions as an “anti-AI trade.” However, he emphasized that high oil prices, currently close to $117 per barrel, could pose significant challenges, and any recent market fluctuations may not persist without improvement in geopolitical conditions.
The broader market faced pressure from rising oil prices. The Nifty Smallcap 250 index saw a nearly 6% decline in October, marking its weakest performance over the past seven months, while the mid-cap index fell by 3.4%.
In a positive development, there were early signs of foreign investments returning to the Indian equity market, as overseas investors purchased over $1.2 billion in equities as of Wednesday. Additionally, October witnessed India leading in initial public offerings (IPOs), driven by the high-profile debut of Jio Platforms Ltd. Companies raised approximately 455 billion rupees (about $4.8 billion) from new listings, outperforming the U.S., which raised $2.1 billion, and Hong Kong, which gathered $1.5 billion.
While the headline index reported gains, smaller and mid-cap stocks lagged behind, and high oil prices remained a concern. The Nifty 50 is still down nearly 12% year-to-date, trailing behind stock performance in Taiwan and South Korea. Investor sentiment is being influenced by India’s limited exposure to AI hardware, tentative foreign inflows, and significant IPO activity.
