Investors are turning toward India's large-cap stocks as a global AI selloff and a slump in small caps weigh on markets. Software services exporters claimed all five top spots in the large-cap index in October, and Wipro led with a 25% gain. A gauge of IT shares surged nearly 18%, its best month since July 2020.
India's benchmark Nifty gained nearly 2% in October, making it Asia's best-performing equity market even as global technology stocks slumped. Smaller stocks came under pressure from weaker retail appetite and the unwinding of leveraged positions. The BSE Large Cap Index outperformed the BSE small- and mid-cap gauge by the widest margin since February 2025.
JM Financial said easing valuations and improving earnings should support the market, but elevated oil prices remain a key risk. Brent crude surged 14% in October to $118 a barrel, its highest in seven months. JM's analysis shows global funds sold local stocks in six of the seven months since 2016 when Brent averaged above $105, with outflows averaging $4.1 billion a month.
Domestic investors are gaining influence. Motilal Oswal data shows domestic institutional ownership of Nifty 500 stocks reached a record 21.3% at the end of September, while foreign ownership slipped to a fresh low of 16.8%. India also topped the global IPO league table in October, raising about 455 billion rupees ($4.8 billion) through listings, helped by Jio Platforms' blockbuster share sale.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing