Indian equities face potential November rebound amid lingering crude and global tech headwinds

Indian stock markets could experience a rebound in November after slipping into oversold territory during the previous month, according to assessments from major brokerages. The benchmark Nifty 50 briefly dipped into the oversold zone in October, bringing its year-to-date losses to approximately 13%. This marks a trajectory toward what could be the index's worst annual performance in over a decade.

An oversold market condition typically occurs when the relative strength index of an index or stock falls below 30. While this often implies a potential short-term rebound, market analysts clarify that it does not guarantee an immediate end to the broader downtrend. During the October derivatives series, the Nifty 50 ended virtually flat, while mid-cap and small-cap segments each lost about 4%.

Brokerage firm IIFL Capital noted that factors such as elevated crude oil prices and the continued interest of global participants in the artificial intelligence trade will make relative outperformance difficult for the Nifty. IIFL has identified a technical rebound scope between 23,300 and 23,500, stating that only favorable sentiment-boosting announcements or a revival in foreign capital flows could trigger a stronger short-covering-driven rally beyond the 23,500 mark.

Similarly, Nuvama highlighted that investor positioning for the November series indicates a directionally inconclusive market. Nuvama projects that oversold conditions could lift the Nifty toward 23,250, though a sustained rally would require a decisive break above 23,480.

Data on foreign investor positioning reveals a shift from aggressive bearishness toward a more balanced stance. Foreign investors reduced their index short positions in the Nifty 50 to 221,000 contracts by the end of the October derivatives series, down from 267,000 contracts at the start. They also added long positions in single-stock futures and trimmed their index futures open interest.

External macro factors continue to influence domestic market sentiment. As the world's third-largest crude importer, India remains sensitive to higher oil prices, which can drive inflation, strain public finances, and compress corporate earnings. Meanwhile, global markets experienced turbulence as MSCI's emerging markets index slid 7.4% in October while investors reassessed their AI-related bets amidst high valuations.

Despite these headwinds, the information technology sector provided a notable cushion during the October derivatives series. IT stocks surged 16.3%, supported by better-than-expected quarterly financial results and a brief unwinding of the global AI trade, helping benchmarks offset losses driven by high oil prices. IIFL Capital characterized this IT sector buying as the sole silver lining of the October series.

Looking ahead to November, Nuvama anticipates meaningful additions in bullish positions within the IT and telecom sectors, alongside defensive positioning in metals, autos, and fast-moving consumer goods (FMCG).

"The current market positioning reflects a cautious approach among institutional investors as India navigates global macroeconomic shifts. While oversold conditions create room for a technical rebound in November, fundamental domestic and external pressures—particularly crude oil prices and shifting global technology capital flows—mean that sustainable rallies will require concrete economic catalysts rather than mere technical corrections. Businesses and investors should maintain a balanced perspective during this period of market consolidation." — Dr. Shishir Gupta, Founder & CEO, StartupLanes