Nifty May End Year Lower Despite Potential Relief Rally, Says Octanom Tech CEO

The Nifty 50 may end the year in the red, though oversold market conditions could fuel a relief rally toward 23,800 to 24,200. Rahul Ghose, founder and CEO of Octanom Tech and Hedged.in, stated in an interview with Mint that foreign portfolio investors will not return until the US dollar and US yields peak.

Market Conditions

Getting back into the green would need a rally of about 15% in ten weeks, as the index stood at 22,888.95 on October 19 after closing above 26,100 at the end of 2025. Two main triggers are needed for a sustained turnaround: a credible de-escalation around Hormuz that pulls Brent crude back below $90, and a peak in US yields. On the charts, bulls must hold the 22,000 to 22,300 zone, and the index needs a close above 23,200 for a trend change.

Capital Flows and Economy

Real GDP grew 7.8% in the first quarter of fiscal year 2027, and the IMF revised India's growth outlook up to 7%. However, the 10-year US Treasury yield is above 5.2%, drawing foreign money away toward risk-free dollar returns and North Asian AI markets. Foreign portfolio investors withdrew ₹3.08 trillion in calendar year 2026, which is nearly double the ₹1.66 trillion withdrawn in all of 2025. Meanwhile, domestic systematic investment plans have kept the market steady.

Earnings and Oil

Corporate earnings show strong spots, with TCS reporting a consolidated net profit rise of about 15% year-on-year, HCLTech's net income growing 21.2% with shares jumping over 8%, and Trent rising 12.64% after a strong Q2 business update. At the same time, the Indian crude basket averaged roughly $120 a barrel in October while retail fuel prices remained frozen since June, creating losses for oil marketing companies and squeezing margins in paints, chemicals, tyres, and aviation. The Reserve Bank of India raised the repo rate by 25 basis points to 5.50%, marking its first hike since February 2023.

Investment Strategy

Ghose recommends staying selective rather than chasing the whole index. His top picks include large private banks like HDFC Bank and ICICI Bank, IT services firms like HCL Tech and TCS, and capex players like Larsen & Toubro and Bharat Electronics. He also views upstream energy firm ONGC as a hedge while keeping an underweight stance on oil marketing companies, paints, aviation, and rate-sensitive mid-op financials. Regarding the long-term capital gains tax, SBI Research called on the government to reconsider the 12.5% tax rate, though Ghose notes that macro forces like global yields and oil prices matter far more to foreign investors.

Context

Global financial markets often experience capital outflows from emerging economies when US interest rates rise, as investors chase safer returns in developed markets. Commodity prices, particularly crude oil, heavily influence India's import bills and domestic inflation, which in turn guides monetary policy decisions by the central bank.