Dussehra, Navratri, Durga Puja, Diwali and Halloween – the month of October marks the beginning of festivities.  As the nation lights up in myriad colors to celebrate the various aspects of spirituality, the verve and the vibe also signifies the capability and the willingness of the retail consumer to be able to spend. An increased consumer spending and the magnitude of the festivities, signify many positive things. To start with, it highlights the increased purchasing power in the hands of the consumer. It is also reflective of the overall positive sentiment and the economic growth that the country has been witnessing over the recent years.

India continues to remain a resilient growth story despite global geopolitical headwinds. Although the Israel war could have an impact on the oil situation in India, the market sentiment continues to remain positive. To start with, the RBI kept Repo rates unchanged during the October monetary policy meeting and this comes backed with a positive outlook by the RBI governor. The economy continues to be buoyed by domestic investors even as FII’s remained net sellers for a third month in a row. Among other factors, Indian indices witnessed significant growth, with the Nifty touching the 20,000 mark during the month of September. Having said that, it closed -2.85% lower with most indices posting losses during the month of October 2023. This was largely owing to the global geopolitical situation and the increasing uncertainty due to higher yields in the US and a stronger dollar.

Despite these factors, India continues to gain ground led by an increase in capex, strong GST collections and technological advancements that have led to increased collections of Income taxes. Factors like the inclusion of India in the JM Morgan EM Bond Index also represent a significant milestone, elevating the country’s global presence. We’ve also witnessed significant improvements in the PSU sectors like infrastructure, power, logistics and real estate. The demand within the autos segment driven by technological advancements in the sector is another positive. Going forward too, we expect to see incremental growth in sectors like Banking, Autos and consumer staples.

On the macro side, we expect inflation to soften and this is evidenced by the lowering of vegetable prices. Having said that, there are a few risks in the form of the El Nino effect which could lead to a slight decline in the output of crops.  RBI’s announcement around open market operations is another measure that’s directed to manage rupee liquidity. On the debt side, we think that it’s best for investors to maintain an investment horizon of 3-12 month by investing in Ultra short, low duration and floating rate funds.              Other funds categories that investors could look at include the corporate bonds, short term funds, dynamic bond funds and Banking and PSU funds based on their investment goals and risk return expectations.