Jio's IPO Draws 22x Demand and Earnings Hold Up, as Nifty Pauses After a 3% Rally

Nifty 50 ended Friday at 22,600, down 87.65 points or 0.39%, and the Sensex at 73,123.83, down 125.56 points, its fourth straight decline. Over the week Nifty lost about 2.4% and the Sensex about 2.2%. Friday was worse than the index suggests: the Nifty Midcap 100 fell 2.2% and the Smallcap 100 fell 2.9% on the day (for the full week, the Nifty Smallcap 250 fell 7.1% and the Midcap 150 fell 5.3%, according to Mint), India VIX rose about 6%, and analysts noted Nifty ended below both its 200 week and 20 day moving averages. They cited valuation worries, unwinding of leveraged positions, surging crude and a global selloff in AI stocks.

The levels to watch are now close to the lows of earlier this month. Nifty touched 22,363 on October 12, and analysts cite support at 22,500 and then 22,200, with resistance near 22,700 to 22,800. The index remains about 14% below its September 2024 closing high of about 26,179.

The week's shock came from abroad. On Thursday in the US, Meta fell about 7% after its capital spending outlook reignited doubts about returns on AI investment, and the Nasdaq dropped 2.6%, its largest single day fall since June, while the S&P 500 lost 1.2%. Lam Research, a chip equipment maker, fell about 12%. Asian markets had already closed sharply lower, by roughly 2.5% to 3.5% on Thursday, and India followed on Friday.

Oil added to the pressure. Brent rose about 3% on Thursday to roughly $113, a five month high, after an attack in Saudi Arabia, and traded around $108 to $114 through the week. One positive for India: the US 10 year yield dropped about 19 basis points to 4.95%, which eases pressure on global bond markets and emerging market flows. This follows the same pattern we flagged in last week's outlook, when Korea's Kospi fell into a bear market on chip stock worries.

The minutes of the October 5 to 7 meeting, released on Wednesday, show all six members voted for the 25 basis point hike to 5.50%. The stance moved from neutral to calibrated tightening, with Nagesh Kumar and Ram Singh dissenting on the stance. Governor Sanjay Malhotra said rate cuts are off the table in the near term, which gives savers and investors a clear picture: a hike or a pause is next, not a cut.

The members were worried about inflation. The MPC projects 5.2% for FY27, with the December quarter touching 6%, the top of the tolerance band. One member pointed to household inflation expectations in the September survey, and another warned that supply shocks from crude and food are unlikely to ease quickly. Deputy Governor Poonam Gupta said a further hike might be needed, depending on incoming data. Another member cautioned that moving too fast could hurt growth and capital flows. There is encouraging news on prices too: the HSBC flash PMI shows input cost inflation at its lowest in almost a year, alongside a composite reading of 56.7, a four month high, with services at 56.2 and export orders at a six month high. The next meeting is on December 2 to 4, with two more inflation readings to come.

The large private banks reported on Saturday, October 17. ICICI Bank delivered strong numbers, with profit up 20.1% and loans up 30%. HDFC Bank grew profit 4.7% as treasury gains normalised, and Axis Bank grew 38% on a low base. The market reacted to the margin and treasury detail, with Axis Bank down 4.2% on Monday.

Figures are from secondary recaps of the banks' results, so please verify them against the filings.

On Friday afternoon Infosys reported its quarter. Profit and deals were healthy, with $5.2 billion of large deal wins and AI revenue up 29% on the quarter, while the company trimmed the top end of its FY27 growth guidance. The stock's reaction will show on Monday, since the results came late in the day.

The pattern matches last week's HCLTech and Wipro results: deal momentum and AI revenue are growing well, while overall revenue growth is still modest. On the aggregate, a Mint analysis of 267 BSE listed companies shows Q2 FY27 revenue up 18.1% and profit up 25.9% year on year, the fastest growth for both in at least five quarters, helped by a soft base. Our October 21 tracker of the first 11 Nifty 50 companies showed profit up 17.3%. Tata Motors' commercial vehicle business also swung to a standalone profit of Rs 2,138 crore against a loss a year ago, ahead of estimates, though margins are under pressure from input costs. Analysts quoted by Mint flag that higher crude and borrowing costs could affect coming quarters, so guidance matters as much as the headline.

The Rs 30,213 crore Jio Platforms IPO ended its three day window with strong demand: 22.19 times subscribed by 7 pm on the final day, with institutions leading at 70.55 times. Retail interest was the weakest part, at 2.72 times. Allotment is expected on Monday, and shares should list on October 28.

As we noted last week, this is a fresh issue with no offer for sale, so Meta, Google and other early investors are not exiting, and most of the proceeds repay borrowings. These figures are not final until the exchanges publish the closing subscription.

Foreign investors remain net sellers, with about Rs 3,459 crore sold on Thursday, while domestic institutions bought about Rs 2,891 crore and continue to provide support. The next few days bring the Jio listing, an HDFC Bank leadership change and the Fed's decision, which comes after the Fed raised rates in September and with US inflation at 3.7%.

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