Indian equities outperform Asia-Pacific markets in October as investors shift

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Goldman Sachs Research attributed the market recovery to changing global investment preferences, stronger IT services performance and healthy corporate earnings.

By ANI

Updated - November 02, 2026 at 10:32 AM. | New Delhi

Indian equities outperformed the broader Asia-Pacific region in October, with IT services stocks leading the domestic market’s advance.

Indian equities emerged among the best-performing markets globally in October, supported by a shift in investor interest away from AI-sensitive North Asian markets and towards other sectors, according to a report by Goldman Sachs Research, which said the trend also drove a rotation within the domestic market from AI-linked companies to IT services.

The report said India outperformed the broader Asia-Pacific region excluding Japan (MXAPJ) by 7 percentage points in October, reversing its underperformance during the first nine months of 2026.

“India saw a sharp move up in October, outperforming MXAPJ by 7pp, and becoming one of the best performing markets globally. India benefited from market rotation away from AI-sensitive North Asian markets,” Goldman Sachs noted.

Global rotation lifts Indian equities

The shift came after the NIFTY had recorded a 10 per cent peak-to-trough decline in the third quarter, before rebounding 3 per cent from its early-October lows.

The report said India benefited from a global “market rotation away from AI-sensitive North Asian markets”. A similar trend was visible within the domestic market, where investors moved away from companies classified as AI enablers and towards IT services.

AI enabler stocks underperformed the NIFTY by 6 percentage points in October, after outperforming it by 76 percentage points between January and September 2026.

In contrast, IT services led the market during October, outperforming the benchmark by 14 percentage points, according to the report.

Mid- and small-caps lead market recovery

The broader market also saw a recovery during the week ended October 30. The NIFTY rose 2 per cent, outperforming the regional MXAPJ index, which gained 1 per cent. Mid-cap and small-cap stocks led the advance, rising 3-4 per cent, while the pharmaceutical sector gained 7 per cent. Financial stocks were among the laggards, rising 1 per cent.

Foreign institutional investors turned net buyers, bringing in USD 1.2 billion during the week, although they remained net sellers with outflows of USD 31 billion so far this year. Domestic institutional investors bought USD 400 million during the week, taking their year-to-date inflows to USD 75 billion.

Corporate earnings remain healthy

The report also found that corporate earnings remained healthy. Around 89 MSCI India companies, representing 58 per cent of the index’s market capitalisation, had reported results for the third quarter of calendar year 2026.

Their combined profits were tracking 15 per cent higher year-on-year and 13 per cent sequentially.

However, earnings performance remained uneven across sectors, with metals and mining, utilities and healthcare reporting more positive surprises, while cement and materials and consumer discretionary companies saw more misses.

India’s valuation premium remains elevated

The report said India’s forward price-to-earnings valuation stood at 18.4 times, while the market traded at a 92 per cent premium to the broader Asia-Pacific region, close to its historical highs. The coming weeks will bring further earnings announcements, with several large companies scheduled to report results in early November.

Published on November 2, 2026

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