Nifty 50 down 14.5% from peak; large caps now cheaper — SkimNews
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- Nifty 50 is down 13% over two years and 6.9% in the past month (as of 1 October 2026), now trading at about 17 times one-year forward earnings — roughly 11% below its 10-year average of 18.9 times.
- Brent crude has surged 68% in 2026 to $102 per barrel, which fund managers at Mirae Asset and Nippon India cite as a key correction driver alongside higher global yields, monsoon worries, and FPI selling.
- Foreign portfolio investors pulled ₹35,861 crore ($3.75 billion) from Indian equities in September, bringing net two-year outflows to roughly $60 billion, according to NSDL data cited in the report.
- Large caps reported 17.6% year-on-year earnings growth in the June quarter, while mid-caps sit near long-term average valuations and small caps trade at roughly a 20% premium, making large caps the relative value pick.
- Nippon India's Shailesh Bhan flags large IT companies trading at 12–13 times earnings with 7–8% earnings yields as a potential opportunity, while Bandhan AMC's Viraj Kulkarni says the market is "very polarised" between expensive high-visibility sectors and cheap low-growth ones.
- Insurance stocks corrected sharply after IRDAI proposed steep cuts to distribution commissions and caps on management expenses in a 23 September consultation paper, though Bhan says insurance valuations now discount much of the long-term opportunity.
- Fund managers including Kotak Mahindra AMC's Harsha Upadhyaya and financial adviser Surya Bhatia advise against cutting equity exposure, recommending gradual additions as part of overall asset allocation.
Why it matters: With large caps now 11% below their 10-year average P/E while posting 17.6% June-quarter earnings growth, the valuation case has shifted to large caps — but $102 oil and $60 billion in two-year FPI outflows mean sustained recovery, per Kulkarni of Bandhan AMC, requires both a crude reversal and easing US yields, not just domestic fundamentals.
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