Monthly Market Review: October 2026

*This review was published retrospectively in November 2026 and is dated to the start of the following month. Some figures, such as AMFI flows, were released after month end and are included for completeness. Index returns are as reported in HSBC Mutual Fund's monthly Equity Market Review unless stated otherwise.*

Month at a glance

*Index levels and flows in this edition are from published market reports, since HSBC's October review was not yet available.*

Equity and sectors

The Sensex ended a two-month losing streak, but the recovery was narrow. IT was the standout, up about 17.7%, and large caps led the gains. Mid-cap and small-cap shares fell, and fewer stocks rose than fell.

Foreign investors sold heavily again. Domestic institutions and SIP flows absorbed the selling. Analysts called the move "a rebound, not yet a trend": a lasting recovery would need oil to cool, US bond yields to stabilise and the rupee to hold steady.

Debt and rates

At its 5–7 October meeting, RBI's Monetary Policy Committee voted unanimously to raise the repo rate by 25 basis points to 5.50%. It was the first increase in about three and a half years. RBI also changed its stance from neutral to "calibrated tightening". The Governor said headline CPI inflation is expected to average close to 5.8% over the next three quarters, and raised RBI's FY27 inflation forecast to 5.2%. He also said rate cuts are off the table for now.

For borrowers, floating-rate loans linked to the repo rate are likely to become more expensive. For debt fund investors, higher yields mean short-term losses on longer-duration funds, but better yields on new investments.

Mutual fund flows

AMFI's data for October is due around 10 November 2026, and we will add it in the next edition. In September, equity funds took in ₹38,307 crore and SIPs reached a record ₹32,490 crore.

Gold, silver and global

• Brent crude rose about 13.6% in the month, and was above $110 a barrel late in October. The West Asia conflict remained the main risk.
• The rupee recovered slightly, to about ₹94.95 per dollar.
• Central banks around the world remained cautious about inflation.

What investors may note

• Rising rates mean the cost of borrowing is going up. Review floating-rate loans and avoid taking on new leverage.
• In debt funds, match the fund's duration to when you need the money. Shorter-duration funds are less sensitive to rate changes.
• Narrow, sector-led rallies can reverse. Keep your asset allocation in line with your goals.

The month ahead (November 2026)

• AMFI October data: around 10 November
• CPI inflation for October: mid-November
• Q2 FY27 results complete
• Oil and West Asia developments

*Sources: RBI Monetary Policy Statement (7 October 2026), The Hindu, Mint, published FII/DII data, and AMFI September 2026 data. Figures are rounded.*