Hang Seng Moneycontrol: Indian Equities Under Pressure

As of March 17, 2026, Indian equities are experiencing significant pressure, trading below their long-term average valuations. The one-year forward price-to-earnings multiple for the Sensex stands at approximately 17.8 times, while its 10-year average is 19.8 times. Similarly, the Nifty’s 10-year average price-to-earnings multiple is 18.99 times.

Recent warnings from financial institutions have added to the market’s uncertainty. Nomura has indicated a potential additional correction of about 5 percent in the near term. In a related move, Citi has lowered the valuation multiple for the Nifty 50 to 19 times one-year forward earnings, reflecting a cautious outlook.

Foreign investors have continued to sell off their holdings in the Indian market, while domestic institutions have stepped in to absorb liquidity. This shift highlights the ongoing challenges faced by the Indian equity market, particularly as concerns over crude oil supply disruptions weigh heavily on investor sentiment.

Deepak Jasani, a market analyst, noted, “While PE multiples have become more reasonable than earlier levels, they are still not particularly attractive.” This sentiment is echoed by Rajesh Palviya, who stated that valuations have improved in certain pockets of the market, but foreign investors remain cautious due to currency pressures and global uncertainties.

Moreover, the rising oil prices pose a significant risk to corporate profitability, with potential downside risks estimated at 10 to 15 percent to fiscal year 2027 earnings if these prices remain elevated. The bigger uncertainty lies in earnings, especially over the next one or two quarters, as highlighted by Jasani.

Investor sentiment is further impacted by concerns over crude oil supply disruptions, inflation pressures, and their potential effects on economic growth. As the market navigates these challenges, the future trend of foreign investor behavior remains unclear.

Details remain unconfirmed regarding the long-term implications of these developments on the Indian equity market. With valuations in certain sectors, such as pharmaceuticals, banking, and consumer staples, becoming more reasonable, the market may find some stability amid the ongoing volatility.