India’s Nifty 50 index is down 14% from its peak of 26,216.05 on 26 September. The benchmark index has additionally been one of many worst-performing international fairness indices to this point in 2025. A saving grace is India’s premium valuations have now obtained a actuality examine. The one-year ahead price-to-earnings a number of of MSCI India has dropped to 17.93x from 23.3x on 26 September, confirmed information from Bloomberg. Over the identical time, the measure for MSCI Rising Markets has dropped from 12x to 11.21x.
Will issues take a constructive flip now, even because the financial development outlook seems clouded amid international uncertainties and resultant delays to the home personal capex cycle? Nicely, some are upbeat. “Present market falloff is near the historic median,” stated a current Motilal Oswal Monetary Providers report.
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Motilal’s examine of every drawdown section since 2008 suggests the markets could also be within the latter levels of a correction, with the continued weak spot already having lasted about six months. A drawdown section is outlined as a interval when the Nifty 50 experiences a drop of 10% or extra from its earlier all-time excessive. Every drawdown section is taken into account full as soon as a brand new all-time excessive is reached.
Will outperformance return quickly?
“Primarily based on historic patterns, the MSCI India might doubtlessly outperform the MSCI EM Index within the coming interval,” stated Jefferies India in a report on 5 March, after analysing the underperformance of the MSCI India relative to the MSCI EM Index since 2012.
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“Our evaluation reveals that following important intervals of underperformance, MSCI India tends to outperform the MSCI EM Index. At the moment, over a 90 and 180-day interval, MSCI India has underperformed by 16 proportion factors (ppt) and 22ppt, respectively. Traditionally, when the MSCI India has underperformed the EMs, it has outperformed by 3-18ppt and 4-24ppt within the subsequent 90 and 180-day interval,” stated Jefferies’ analysts.
The constructive affect of earnings tax cuts and the regulatory easing by the RBI (price cuts, liquidity increase) will include a lag. Till then, fears of a commerce conflict loom and traders might take cues from upcoming macro information factors.
With India’s December quarter GDP information already out, the main focus will shift to February retail inflation information, which is due on 12 March, and whether or not the RBI delivers one other 25 foundation factors repo price lower in April. Earlier than that, the US Federal Reserve’s Federal Open Market Committee (FOMC) assembly slated for 18-19 March will see the discharge of the Abstract of Financial Projections.
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