October Markets Hit Six-Month High on IT Rally, Jio Platforms IPO Buzz

A Narrow October Rally Leaves Most Indian Stocks Behind

A strong IT rebound and Jio Platforms’ listing lifted headline measures, but falling mid- and small-cap stocks exposed the rally’s limited reach.

IT stocks powered the benchmark higher

India’s October market performance was shaped by a striking contrast: strong gains in a handful of information technology companies, against weakness across much of the rest of the market. The Nifty IT index climbed 17.69 per cent, its best monthly performance since July 2020, and added 2.32 per cent on Friday. Better-than-expected results from select IT firms helped support the rebound.

That rally helped the Nifty 50 gain 1.9 per cent, putting it among Asia’s stronger major benchmarks for the month. But the advance was concentrated: only 22 of the Nifty’s 50 constituents rose. Four IT companies added more market value than the entire benchmark, a sign that index performance did not reflect the experience of most investors.

Jio’s debut inflated the market-value increase

Jio Platforms’ listing added another powerful headline to the month. The company became India’s second-most-valued company, with a market capitalisation of about ₹13 trillion, and delivered listing gains of 27 per cent. Its size also had a substantial effect on calculations of the total value of companies listed on the National Stock Exchange.

The exchange’s total market value rose by about ₹3 trillion to ₹470.5 trillion. However, that figure included 83 new listings valued at ₹15.3 trillion, with Jio Platforms accounting for ₹13.2 trillion. Since much of Jio’s value was already reflected in Reliance Industries’ share price, the increase in aggregate market value overstates the wealth investors actually gained. The headline total therefore needs to be read alongside the effect of newly listed companies.

Small and mid-caps bore the brunt

The weakness was more pronounced beyond large-cap stocks. The Nifty Smallcap fell 4.06 per cent, its worst month since March, while the Nifty Midcap declined 3.42 per cent after losing 7.62 per cent in September. Of 2,274 stocks listed on both September 30 and October 30, only 406 finished higher.

Fund manager Vinay Jain attributed the correction in small- and mid-caps to valuation rationalisation, sustained foreign institutional investor selling and softer risk appetite. He also noted that these companies had delivered stronger profit growth than large caps so far in Q2FY27. That earnings strength may offer support, but it does not remove the risk that valuations and investor sentiment can continue to weigh on share prices.

Oil, rates and earnings will shape the next leg

The market advanced despite a difficult backdrop: the West Asia war pushed Brent crude up nearly 10 per cent to about $117 a barrel, while the Reserve Bank of India raised interest rates for the first time since 2023. These developments add uncertainty to the outlook and make it harder to interpret the index’s monthly gain as a broad improvement in market conditions.

Jain said the IT rebound reflected improved sentiment, valuation comfort after prolonged underperformance and results from select companies. He cautioned that a sustained recovery would depend on faster revenue growth, stronger deal conversion and firmer discretionary technology spending. He expects returns to become more earnings-driven than valuation-driven, putting greater weight on company-level performance.

The Nifty ended October 12.6 per cent below its 52-week high and only 3.9 per cent above its low. Apurva Sheth of Samco Securities pointed to corrections in US and Indian benchmark bond yields as support for the market uptick, rather than an appreciating rupee. He also cited historically positive November seasonality, while framing a rebound as a possibility, not a certainty.

Key Highlights

• The Nifty gained 1.9 per cent in October, led by a 17.69 per cent rise in the Nifty IT index.
• Only 22 Nifty 50 stocks advanced; just 406 of 2,274 listed stocks ended the month higher.
• The Nifty Midcap fell 3.42 per cent, while the Nifty Smallcap lost 4.06 per cent.
• Jio Platforms’ listing materially affected the rise in total NSE market value, making the aggregate increase a misleading measure of investor gains.
• Crude near $117 a barrel and an RBI rate increase formed part of the month’s challenging backdrop.

Investor Note: October’s headline gain masks narrow participation and persistent weakness in smaller stocks. Investors may want to assess earnings, valuations and business prospects company by company rather than treating the benchmark’s rise as evidence of a broad-based recovery.