According to HDFC Securities' The Big Review 2026 report, markets appear to be approaching the later stages of the current correction cycle. The report notes that bear market phases tend to last around 20 months, and the present cycle is already well progressed, suggesting that downside risks may be gradually reducing. This assessment comes as benchmark valuations have moved closer to levels seen during previous corrections, indicating markets are entering a potential accumulation zone, even though some further moderation cannot be ruled out. Since the onset of the US-Iran conflict, frontline indices have corrected by more than 10%, making valuations relatively attractive. The Nifty 50 is currently trading at approximately 18x earnings, reflecting a 14% discount to its long-period average (LPA) of 20.9x. As per Right Horizons PMS Founder Anil Rego, the recent correction and time-wise consolidation have led to a meaningful valuation reset across segments, while earnings expectations especially in the broader market remain relatively resilient, improving the risk-reward equation for long-term investors.
Corporate earnings are still expected to deliver close to double-digit growth, although some near-term downgrades are likely. As reported by HDFC Securities, broader markets could still see earnings growth of around 10%, with sectors such as BFSI, consumer discretionary, metals, and telecom showing signs of improvement, while energy may face pressure. The recent correction has led to meaningful valuation reset across segments, while earnings expectations remain relatively resilient, particularly from a staggered allocation perspective. HDFC Securities recommends adopting a Growth at a Reasonable Price (GARP) strategy to navigate prevailing market conditions, emphasizing identifying "mispriced" growth opportunities while avoiding speculative bubbles and steering clear of value traps. The brokerage suggests prioritising growth stocks with valuation discipline and avoiding excessive focus on predicting overall index movements.
The report identifies positive sectors including Industrials & Infrastructure, Consumer Discretionary, Real Estate, and Automobiles, while neutral sectors include BFSI, IT, Chemicals, Oil & Gas, Pharma, and Consumer Staples. Cement is identified as negative. Key stock recommendations include Bajaj Auto, M&M, Hero MotoCorp, ICICI Bank, SBI, Larsen & Toubro, Siemens, Infosys, TCS, NTPC, and Power Grid. The report also highlights a 'bounce back basket' of 10 stocks including Hindustan Petroleum, InterGlobe Aviation, and Maruti Suzuki. Right Horizons emphasizes focusing on areas where earnings visibility, balance sheet strength, and structural growth drivers are intact, using volatility as an opportunity to build positions rather than a reason to stay on the sidelines.
India's consumption sector is showing signs of broad-based recovery heading into the new fiscal year, with ICICI Direct's Kaustubh Pawaskar noting that edible oils and industry essentials are driving growth outlook, while FMCG recovery is gradual. Trent delivered strong performance with 20% revenue growth in Q4, attributed to aggressive store additions including 109 Zudio stores and 50 Westside stores during the quarter. However, rising commodity prices and a potentially weak monsoon pose new challenges, with food inflation expected to impact consumer demand. Marico remains a top pick with fourth consecutive quarter of high single-digit volume growth, supported by 35% decline in copra prices that boost gross margins, while Titan shows strong jewellery demand ahead of quarterly updates. HDFC Securities expects the Consumer Staples sector to witness gradual volume recovery, aided by improving rural incomes, though urban demand stabilisation remains a key factor.
According to Mint analysis, net demat account additions fell to 2.15 million in March from 2.81 million in February and 3.62 million in January, marking the lowest level of account additions since May 2025. Month-on-month growth slipped below 1% (to 0.97%), the slowest pace since January 2020. The total number of demat accounts crossed 225 million in FY26, with net additions declining 22% year-on-year from a record 41 million in FY25. As per WealthMills Securities' Kranthi Bathini, "Markets are currently in a consolidation phase. Whenever markets are in a downtrend and sentiment weakens, retail activity tends to decline."
The benchmark indices posted their weakest performance in six years in FY26, with the Nifty 50 declining 5.1% and the Sensex falling 7.1%. Global factors contributed significantly to this volatility, including US tariff actions, geopolitical tensions in West Asia, and persistent foreign portfolio investor outflows at about ₹1.8 trillion during the year. The Nifty Midcap 150 managed a modest gain of 1.6%, while the Smallcap 250 declined almost 5.4%. However, the Nifty 50 surged more than 7% in April so far in the new financial year 2026-2027, indicating positive momentum. HDFC Securities notes that India's valuation premium over other emerging markets has moderated to 27%, compared to a 10-year average of 73% and a peak of 145%. While the report highlights India's macroeconomic stability with growth seeing only modest impact, inflation expected to trend closer to 5%, and fiscal dynamics remaining under control, it flags external vulnerabilities including weak foreign inflows, trade imbalances, and subdued remittances that continue to weigh on the currency.
