Despite the Nifty 50 showing minimal returns over two years, astute investors have witnessed significant wealth creation through stock picking. Forty-three stocks have more than doubled investor wealth over the past two years, with companies in defence, healthcare, and specialty chemicals leading the charge. This period highlights that market opportunities often lie beneath the surface of headline index movements, rewarding patient stock pickers. Among standout performers were Cupid and Sigma Advanced Systems topping the charts, while Sterlite Technologies delivered 357% returns, MTAR Technologies achieved 307% gains, and Apollo Micro Systems generated 280% returns. Several other companies including MCX (271%), Shaily Engineering Plastics (261%), Laurus Labs (254%), and CarTrade Tech (241%) also delivered returns well above 100%.
According to a study by Edelweiss Mutual Fund, Indian stock markets have historically delivered robust returns following prolonged periods of stagnation. Over the past 25 years, the Nifty has shown a pattern where two-year periods of flat performance have often preceded stronger gains. In the 11 instances when the Nifty's two-year compounded annual growth rate was flat, investors earned between 13% and 50% returns over the following year in nine cases. Those who stayed invested for three years generated annualised returns of between 10% and 40% on eight of the 11 occasions. The current phase of weakness invites comparison with the 'taper tantrum' in the US in 2013, when the then-US Fed Chairman Ben Bernanke's remarks about slowing bond-buying programs sparked a global sell-off.
The Nifty has declined 3.52% over the past year and remained largely flat over two years, as reported by The Economic Times. The index peaked at 26,277 in September 2024 before falling to 21,744 by April 2025 following the global tariff shock. It then recovered to a fresh high of 26,373 in January 2026 before slipping back to 23,500 by June 2026 as the US-Israel-Iran conflict and renewed foreign selling weighed on sentiment. With the Nifty delivering little by way of returns since September 2024, many investors have been looking beyond frontline equities in search of better opportunities. The past two years have been frustrating for benchmark investors, with the index completing a near full-circle journey since mid-2024.
Fund managers believe large-cap stocks, which comprise the Nifty, are currently trading at attractive valuations. Neelesh Surana, chief investment officer at Mirae Asset Mutual Fund, stated that "risk reward clearly favours large caps now." He noted that sustained FII selling has made large caps particularly cheap, with the Nifty trading at 18.5 times one-year estimated Price to Earnings (PE) against 24 times two years ago. Price-to-Book valuations are 30-40% cheaper compared to historical levels. The combination of more reasonable valuations and improving earnings expectations has prompted several market experts to turn constructive on Indian equities, particularly in the large-cap segment. Fund managers said valuations of large-caps, which comprise the Nifty, are cheaper than those of mid-caps and small-caps, with meaningful scope for PE multiple expansion alongside double-digit earnings growth.
Financial advisors are recommending a cautious approach to current market conditions while highlighting the opportunities beneath headline index movements. Amit Sahita, director at Fincode Advisory Services, suggests that "current PEs have historically proven to be excellent entry points for long-term investors." He recommends staggering investments and using a buy on dips approach given the global environment, as reported by The Economic Times. The current phase of weakness has been compared to the 'taper tantrum' in the US in 2013, when the then-US Fed Chairman Ben Bernanke's remarks about slowing bond-buying programs sparked a global sell-off. However, financial advisors warn against lump sum investments at this juncture, emphasizing the importance of a phased investment strategy. Historical market data offers encouragement for long-term investors, with every previous instance since 2001 where the Nifty remained largely flat over a two-year period being followed by positive one-year returns, ranging from 5% to as high as 50%.
