Kohli: Markets Oversold, Largecaps the Best Entry Point
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- Rishi Kohli frames the January-March selloff as a seasonal pattern that hits ~95% of the time, though he says this episode's volatility has been amplified by the war and rapidly shifting geopolitical headlines.
- Indian market valuations sit at a trailing 12-month P/E below 19x — the lower end of the 10-year band — with weekly RSI at levels historically seen only 1 in 7-8 times, Kohli said.
- Headline indices are down 15% from peak, with the top 10 stocks at historical bottoms and largecap-to-midcap ratios at 97th percentile lows, according to Kohli's reading of breadth data.
- Kohli recommends deploying 50% of available cash now and staggering the rest over the next two months, citing the typical May-June seasonal decline window as the reason to avoid going all-in.
- Earnings growth expectations will likely be cut 3-4% for the coming financial year — 14% expected growth should now be ~10%, and 12% expected should be 8-9% — due to India's crude price sensitivity and ongoing geopolitical tensions.
- Mid and smallcaps are more beaten down than largecaps but still trade above their mean valuations, while largecaps sit at near 10-year lows, making largecaps the cleaner relative-value bet.
- Kohli's firm runs a systematic quantitative process with monthly rebalancing across 17 level-two sectors and is closing the NFO on a new largecap fund the day after publication.
Why it matters: Investors holding cash face a narrow window where largecap valuations are at 10-year lows and breadth indicators are flashing extreme oversold readings, but Kohli himself attaches a 3-4% earnings downgrade to that entry — making his 50% deployment with the remainder staggered over two months the rational hedge between opportunity and the May-June tail risk he flags.
