Nifty 50 down 12% from September 2024 peak: Motilal Oswal
Metals and PSU Banks have been among the key outperformers, while Technology, Consumer, Media and Real Estate have been among the key laggards
The Nifty 50 has fallen 12 percent since reaching its September 2024 high, but Motilal Oswal Financial Services believes this market weakness may not fully represent the underlying fundamentals. In a recent report, Oswal said Indian equities have been in a long consolidation phase for two years due to global, geopolitical, and macroeconomic challenges.
However, they noted that strong domestic institutional flows, improving earnings prospects, and a correction in valuations have enhanced the risk-reward for Indian equities. While the Nifty 50 has slipped 12 percent from its September 2024 peak, the Nifty Midcap-150 has remained relatively stable, and the Nifty Smallcap-250 has declined slightly over the same period.
Sector rotation has also played a role, with defence, metals, and PSU banks gaining 19 percent, 14 percent, and 10 percent, while technology, consumer, media, and real estate companies have lagged, declining 18 percent, 17 percent, 15 percent, and 12 percent, respectively. Valuations have significantly corrected from their September 2024 highs, with large-cap and mid-cap valuations down 29 percent and 27 percent, respectively, on a 12-month forward P/E basis, while small-cap valuations have declined around 4 percent.
Oswal stated that this correction, coupled with improving earnings outlook, has strengthened the risk-reward profile of Indian equities. Domestic liquidity has supported the market despite substantial foreign investor selling, with foreign institutional investors (FIIs) withdrawing around $56 billion over the past 24 months, while domestic institutional investors (DIIs) invested approximately $177 billion.
The primary market has remained active, with ₹10.1 lakh crore raised through IPOs, fresh offers, and other offerings between April 2023 and September 2026. The brokerage anticipates a 16 percent compound annual growth rate (CAGR) for both the MOFSL Universe and the Nifty over FY26-28E, with earnings growth expected to be stronger across the broader market.
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