India’s flagship index has dropped about 8% since hitting a record in September. That puts it firmly in what analysts call “correction” territory.
And not a minute too soon. Corporate earnings have slowed, and if stocks had continued climbing, valuations could have veered into bubble territory—a far riskier scenario.
Even after eight weeks of declines, India is still the world’s most expensive emerging market.
Earnings expectations have taken a hit. Citigroup and Jefferies have downgraded forecasts for Nifty 50 companies, which are now projected to see just 5% profit growth this year—their first single-digit gain in five years.
Kotak Institutional Equities warns this slowdown in corporate performance could signal broader economic cooling, with consumption trends already looking bleak.
So, buy the dip?
For now, it may be better to cool your heels. Price-to-earnings ratios, which measure a stock’s value, have eased from 25 to 23 but that still ain’t cheap and analysts reckon they may have further to fall.
Fresh corruption allegations against Gautam Adani and his companies are also casting a shadow over investor sentiment.
But look, this is India we’re talking about. Long term, it’s a growth story. And here are some potentially bullish turns:
- If China’s stimulus bazooka misfires, foreign investors might shift their focus back to Indian equities.
- If the Trump administration launches its tariffs attack on China right on Day 1, it will be good news on Dalal Street
So, keep your cash handy and watch for the all-clear signal. Patience is your best investment rn.
