A very volatile month for domestic equities. The month started positively, however most of the gains were eroded in the second half. Since 19th October 2021, Nifty50 corrected 5% from its mid-month peak.
Nifty50, Midcaps and Smallcaps ended the month almost flat (0.2% – 0.4% absolute returns). Nifty Next 50 underperformed and delivered -0.7%.
Autos: Best performing sector this month. Followed by Financials, Consumer Durables and Power
Within Commodities: Metals continue to underperform, Power continues to outperform (3rd month in a row)
PSUs, IPOs marginally outperformed broad market indices
After 2 weak months, equities gathered some momentum in October. Developed markets outperformed over emerging markets.
US: The best performing market as Q3 earnings season has been bumper with 80% of companies beating expectations. Both S&P 500 and Nasdaq made fresh record highs.
Europe: Equities cheered better than estimated Q3 GDP number and official take off of the EU recovery fund.
Brazil: Weakest equity market again (-6.6%) – Amidst political turmoil, they announced another rate hike of 150bps this month. The benchmark rate has moved from a low of 2% to 7.75% in 2021 as the country continues to see double digit inflation!
China, Hong Kong: Equities finally rebounded this month as Evergrande managed to make interest payments that it had missed in September and gathering confidence on Chinese Authorities to manage spillover risks.
South Korea: Continued FII selling from Korean markets – now amongst the worst performing markets in last 6 months.
India: After outperforming peers for few months delivered below average performance this month due to FII outflows and downgrades by international sell side firm/s due to stretched valuations
With energy, most metals and agri commodities doing well in October, developed market commodity currencies (CAD, NZD, AUD) appreciated versus USD.
Latin American currencies have weakened – major negative impact given heavy dependence on China (energy crisis led factory shut downs)
Japanese Yen is a safe haven currency and has been retreating as economies reopen and sentiment rebounds