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The increase in volatility in the Indian markets in October was on the back of weak global cues, stretched valuations, and FIIs turning net sellers, according to a report by Motilal Oswal Financial Services.

FII outflows of $2.3 bn were seen after two consecutive months of inflows. FIIs saw inflows for the eighth consecutive month of $0.6 bn.

In the last 12 months, midcaps have risen 79 per cent v/s a 52 per cent rise for the Nifty. In the last five years, midcaps have underperformed by 14 per cent. In P/E terms, the Nifty Midcap 100 is trading at a 14 per cent premium to the Nifty, the report said.

The Nifty continued to reach new highs (18,604) in October 2021. The index oscillated 1,150 points before closing 54 points (or 0.3 per cent) higher MoM at 17,672. The Nifty is up 26 per cent in CY21YTD.

The 2QFY22 earnings season has thus far been above estimates, benefiting from strong growth in the Technology sector, steady recovery in loan growth as well as recovery and an upgrade in the asset quality of most private sector banks, higher commodity prices and volume growth in the Energy and Metals sectors.

In the last 12 months, MSCI India (50 per cent) has outperformed MSCI EM (15 per cent). In the last 10 years as well, MSCI India has outperformed MSCI EM by 167 per cent. In P/E terms, MSCI India is trading at a 94 per cent premium to MSCI EM, above its historical average of 58 per cent.

Among the sectors, PSU Banks (14 per cent), Automobiles (7 per cent), Media (5 per cent), Utilities (4 per cent), and Private Banks (4 per cent) were the top performers in Oct'21.

Tata Motors (45 per cent), ICICI Bank (14 per cent), SBI (11 per cent), Titan (10 per cent), and M&M (10 per cent) were the top performers. On the other hand, HUVR (-11 per cent), Coal India (-11 per cent), Eicher Motors (-11 per cent), HCL Tech (-11 per cent), and TCS (-10 per cent) led decliners, the report said.