Market Crash Deepens: Nifty50 Drops 6.5% in October - What Should Investors Do?

October’s market dip has Nifty50 down by 6.5%, with Sensex under pressure as FIIs withdraw funds. Analysts recommend selective investments in quality large-cap stocks for long-term gains.

By Aayushi Dubey Oct 25, 2024, 17:54 IST

Indian market shut heavy losses on Friday, October 25; the Sensex and Nifty50 fall nearly 1%, and the market fell around 6.5% in the month of October. A 6.5% monthly loss due to FII outflows, high valuations, and earnings disappointments have left a negative shadow on the investor sentiment. The benchmark closed 663 points lower at 79,402 and Nifty settled at 24,180 slumping below all key support levels for the first time since August.

The market capitalisation of the benchmark indices of BSE and S&P BSE crashed by around ₹9 lakh crore during the October selloff. The total value of the BSE-listed companies declined to about ₹435 lakh crore from ₹444 lakh crore, underlining the pains of investors.

Expert Views and Suggestions

Analysts believe this correction is part of a broader trend fuelled by disappointing earnings, valuation concerns, and uncertain global conditions. FII selling, along with a shift toward the Chinese market, is keeping pressure on financial and midcap stocks, believes Santosh Meena, Head of Research at Swastika Investmart. Meena recommends selective investment in high-quality large-cap financial stocks, especially when they reach attractive valuation levels.

Krishna Appala from Capitalmind attributes the sell-off to high input costs and softening demand in consumer sectors like FMCG and auto, impacting company margins. Appala advises careful accumulation of high-conviction stocks as the market approaches stability.

Technical Analysis and Support Levels

Other technical analysts expect the market to find potential support levels, which may stabilize its movement. Aditya Agarwal from Sanctum Wealth spotted 24,000 as the critical support for the Nifty, and some form of pullback was possible if the level was held. Short-term resistance was expected between 24,400 and 24,500.

Therefore, analysts think this phase provides a strategic opportunity to value-oriented growth stocks investors. Though short-term volatility may continue, selective investment in quality stocks could be a boon in the long run.

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