On a year-to-date (YTD) basis, the Nifty 50 is down approximately 7%. In comparison, the Dow Jones is marginally higher by 0.17%, the Nasdaq has gained over 3%, and the S&P 500 has risen 2.4%. Among Asian peers, Japan’s Nikkei has surged over 14%, while South Korea’s Kospi has rallied more than 43%. It's more important to be mentally prepared for what to expect in the coming days rather than just making investments or holding the same.
The time is not good, and Q1 of FY-27 also does
not look good. Yes, we are yet to finish
the results of Q4 FY-26, and we are discussing here for Q1 of FY-27. The reason
being we need to be mentally prepared rather than getting shocked and having night
attacks due to investment decisions.
The biggest factor to watch is whether the
current market has already discounted it or it's yet to be discounted. We have
much pain left as Q1 results will be destructive for the markets, and if the monsoon
also falls short, then we will have a perfect recipe for slow growth.
The war might end, but the damage will take
time; it is no longer the crude price factor but the ancillary impact due to
the current war. The supply disruption is a major factor to be accounted for
and figured out. Not a single fund manager across the globe can figure out the
impact of the current disruption and its longevity. Indian markets are going to
face issues only due to the disruption of the supply chain and domestic reasons,
like the weaker monsoon. If the monsoon
is not up to the mark, then India will face issues of demand for goods and services
and water supply issues going ahead. Agri inflation will shoot up, making this uncomfortable
for the RBI.
In fact its not the Q1 but the Q2 also will be
under pressure since all festivals are in September and October stretched to
November, hence Q3 of FY-27 will get green shoots, which will be impactful for
your current investments being executed by you now. Provided that there is no Comic Act by Mr Trump
going ahead. In short, you need to be prepared to find investment opportunities
in FY-27 rather than looking for returns like the last 6 years. Change of mindset is
important in FY-27 about the expectations from the market.
Further, due to the war, global inflation will
shoot up, which will prompt many nations to press for a rate hike. This will
impact INR in the coming days, and markets are bound to face headwinds. Expectation
about FII’s coming back to India seems to be more dicey in the coming days due
to the structural shifts and long-term issues that are going to arise from the
war. FII’s have better options as of
date, like higher US bond yields of 4.3–4.5% and better global opportunities, followed
by the US, where tech and AI stocks fuel growth, have pulled more of the funds
compared to India, which is dominated by financials and consumption, limiting
broader upside. A 2–3% rupee depreciation has further reduced foreign investor
returns, keeping markets subdued despite strong domestic inflows and 6–7% GDP
growth expectations.
On the other hand, investors have raised their
net inflows into equity funds to ₹40,450 crore in March from ₹25,977 crore in
February 2026, a 56 per cent jump. Flows through the Systematic Investment Plan
(SIP) route hit a new record in March, bringing in ₹32,087 crore and up 7.5 per
cent from the previous month. All this is good news.
Among all
these, the good part is that the Indian financial system is strong enough to
face any blackouts. Bank credit expanded by 16.08 per cent year-on-year (Y-o-Y)
in FY26, marking the fastest pace since FY24, when credit in the system grew by
over 20 per cent. ), During the same
period, deposits rose by 13.47 per cent Y-o-Y, also the highest growth since
FY24, according to the latest data from the Reserve Bank of India (RBI).
Nifty 50’s trailing twelve-month (TTM) P/E has moderated
from around 24.4x in September 2024 to approximately 21.3x as of April 15,
2026, below its five-year average of ~23.0x. This might get cheaper in Q1 of
FY-27, which will keep all investors waiting for investments.
Many investors believe that, due to the current correction,
large caps have become cheaper and will bounce back significantly, providing a
cushion for the portfolio. Well, the Nifty 50's fall has been stable compared
to Midcap and small cap; hence, the notion that large caps have corrected and
become cheaper is wrong.
The Depth of Fall and & Opportunity
Large Caps: Many large-cap names corrected 10–25%
from their 52-week highs (e.g., some IT, auto, and FMCG stocks down 17–48% from
peaks in select cases).
Midcaps: In broader mid-cap universes, over 119 out
of ~143 stocks turned negative in early 2026, with dozens falling 10–50%+ from
52-week highs. 14+ Nifty Midcap stocks plunged 40–50% from their peaks at
points.
Small Caps: In
the Nifty Smallcap 250 or broader small-cap universe, ~50–70%+ of stocks saw
double-digit declines; many fell 30–50%+ (some even 50%+ from 52-week highs). Examples:
Over 20 small-cap stocks dropped more than 50%, and 82+ fell over 30% in
certain drawdown periods.
On the sectoral front, don’t get caught up in investing
in defensive. Be open to all sectors since every sector, and your investments, have long-term fortune, and they are bound to come up from the bad cycle
Conclusion:
Invest through the STP mode. Don’t expect large caps to bounce back compared
to the fall since they have failed less compared to midcap and small cap stocks.
This is one of the best times to build wealth. Book losses and don’t keep them
close to your heart. Exiting from non-performing things increases the
opportunity of recouping the losses from good investments. Re-alignment of the portfolio
is more important compared to investing fresh money. Don’t go for investments
in stocks just because corrections have happened, remember even the best stock that
has fallen may not rise quickly. Hence, invest in MF since stocks have fallen my
50%, but not a single mutual fund has fallen by 50%. This is mostly ignored
while doing investments decision. Moreover, as a client, one needs to be mentally
prepared that this year is the year of investments and not to chase returns. In
every 4-year cycle, the market provides this type of opportunity to investors
and creates long-term wealth.
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