For the first time in over 14 months, India’s market capitalisation has fallen below the $4-trillion mark. Foreign Institutional Investors (FIIs) have been withdrawing funds from emerging markets and reallocating them to US equity and bond markets. The Nifty-50 index has achieved only a 4 percent growth in profit after tax (PAT) over the nine months of FY25, a significant decrease compared to the healthy CAGR of over 20 during FY20-24. Out of the 25 sectors analysed, three sectors outperformed expectations, while 12 fell short. The earnings upgrade-to-downgrade ratio for FY26E has become less favourable, with 37 companies seeing their earnings upgraded by more than 3 percent, while 137 companies faced downgrades of over 3 percent. The projected Nifty EPS for FY 26 is now expected to be Rs 1,203, which corresponds to a valuation multiple of 19 times—lower than the long-term average of 20.5. The figures underscore the extent of value erosion in the market, particularly among small-cap stocks.
