The Indian equity markets are witnessing a broad-based decline in valuations. Only 10 percent of Nifty 500 stocks are trading above their 200-day moving average. The proportion of stocks trading below 3x price-to-book (P/B) ratio has risen to 33 percent (or 1 in 3 stocks) in the Nifty MidSmall 400 Index. The report notes that excluding the banking and financial services sector (BFSI), small and midcap earnings have contracted year-over-year, marking a significant reversal from previous years. Experts suggest that another 8-10 percent price correction or continued earnings growth will provide stronger investment opportunities. However, it cautions that small & mid-cap stocks may still be overvalued, as per the DSP report. It also advises investors to top up their SIPs and focus on large caps for staggered purchases and equity allocations, as well as hybrid funds such as Dynamic Asset Allocation strategies or Dynamic Multi- Asset Allocations.