100 days have passed since the war in the Middle East. Which has affected all the people of the world. Where on one hand inflation is increasing. Also, there has been a continuous decline in the stock markets around the world. India has suffered the most loss in this war in these 100 days. Where the stock market has seen a decline of more than 8 percent. On the other hand, stock market investors have suffered a loss of Rs 8.40 lakh crore.
However, the Indian stock market has had to face a double challenge during these 100 days. The biggest challenge was geopolitical tension, due to which the crude oil of Gulf countries crossed 96 dollars per barrel. The second biggest challenge was the selling of foreign investors from the stock market. Who have sold 28 billion dollars in the current year. This selloff is happening with the continuous cuts in India’s corporate earnings estimates.
Since the start of the war in West Asia, analysts have reduced MSCI India’s profit forecast for calendar year 2026 from 16 percent to 13 percent. This fall in the local market, which came after a huge fall of 4.18 percent in Nasdaq, has shaken the global market and also created a stir in technology-intensive hubs like South Korea and Taiwan.
Dr. VK Vijayakumar, Chief Investment Strategist of Geojit Investments Limited, said that there are many challenges facing the market this week. Crude prices have increased due to increasing conflict in West Asia and Iran firing missiles at Israel in response to Israel’s action in Lebanon. Brent crude has crossed $96. The jobs figures from America are good, so the Federal Reserve will not cut rates as President Trump wants. There is a possibility of no change in the rates for some time.
On the other hand, the huge fall of technology stocks in global benchmarks may also give hope for an unexpected positive change for Indian equities through capital reallocation. Dr. Vijayakumar said that it is important to keep in mind that the selling in America on Friday was mainly in technology stocks. This may change the direction of investment from AI trade to non-AI trade, which may be beneficial for India. If AI trade cools down and changes, then FPI withdrawals may also stop or go in the opposite direction. Therefore, it is very important to keep an eye on this trend.
Which stocks fell the most?
- Market data shows that the increase in tensions has adversely affected certain segments of the domestic market, with the banking and financial services sector suffering the most. While the value of Nifty has declined by more than 7 percent in the last 100 days, PSU banks have suffered the most. The Nifty PSU Bank index has fallen by about 16 per cent since the war started, resulting in a loss of more than Rs 3.6 lakh crore in market capitalisation.
- The value of State Bank of India has declined by 18.6 percent. There has been a decline of 18.1 percent in Bank of Baroda. There has been a decline of 17.5 percent in Punjab National Bank. Union Bank of India has declined by 17.4 percent. There has been a decline of 19.6 percent in Bank of India.
- There has also been a huge decline in oil and gas stocks, a decline of about 9.4 percent has been seen in this sector. Bharat Petroleum Corporation has declined by 23.5 percent. Indian Oil Corporation has declined by 26.2 percent.
- Nifty Bank has fallen by 9.97 percent since the conflict started. The performance of private banks has been slightly better, but still they have declined by more than 8 percent. There has been a decline of 8.5 percent in ICICI Bank. Axis Bank has declined by 8.1 percent.
- Due to the fall in Nasdaq, Nifty IT has fallen by 5.2 percent. TCS, the largest company of Tata Group, has declined by 16.6 percent. HCL Technologies has declined by 16.9 percent. Infosys has declined by 7.9 percent.
- Auto sector has also not remained untouched by this, Nifty Auto has declined by 7.1 percent. Tata Motors has declined by 26.9 percent. Ashok Leyland has declined by 31.2 percent.
- The value of Nifty Financial Services has declined by more than 10 percent. Insurance companies, NBFCs and financial services firms have suffered similar losses. There has been a decline of about 20 percent in HDFC Life Insurance, 26.2 percent in ICICI Prudential Life and 23.9 percent in SBI Cards.
- Talking about blue-chip shares, Reliance Industries has declined by 7.4 percent. HDFC Bank has declined by 15.8 percent. There has been a decline of 10.5 percent in ITC. Maruti Suzuki has declined by 12.2 percent. Bajaj Finance has declined by 10.7 percent. Godrej Consumer Products have declined by 18 percent.
- On the other hand, the pharma and healthcare sectors have performed very well. During this period, Nifty Pharma has increased by 5.6 percent. Nifty Healthcare Index has increased by 3.6 percent. Growth has also been seen in capital market, defence, metal and energy sectors.
- Small and mid-cap indices like Nifty Smallcap 100, Nifty Smallcap 250 and Nifty Midcap 100 have either remained stable or have gained. This reflects a domestic growth story that is largely decoupled from the global tech sector.
EPS may remain less for two months
Goldman Sachs said in a research note that we expect foreign investment in equities to remain low due to the possibility of worsening earnings cycle going forward. He further said that his indicators show that there could be a further 3 percent reduction in EPS (earnings per share) in India in the coming two months, which is higher than most markets in the sector. To prevent capital flight, the Reserve Bank of India (RBI) and the government have undertaken several structural reforms to create forex buffers.
These include exempting interest and capital gains from FPI investments in government securities from tax, raising the cost of hedging on FCNR deposits, expanding the scope of the forex swap window and expanding access to government bonds through the FAR route. These changes have provided immediate stability to the local currency. The Indian rupee, which had fallen to a historic low of 96.96, has now strengthened to around 94.94. It is expected that this strengthening of the rupee will act as a base and prevent FIIs from continuing panic selling.
Experts’ advice to investors
As the domestic market is reaching new levels, there is a difference in the valuations of stocks of different market caps, due to which the strategies of fund managers are changing. Domestic institutional investors (DIIs) continue to support the market and handle the selloff with investments worth $44 billion (YTD). Fund managers say that some parts of the market have fallen so much that now there is relief in the valuation of some stocks.
CA Anupam Tiwari, Equity Chief, Grow Mutual Fund, says in a media report that in recent months, concerns about the level of valuations in the market have reduced. Currently, about one-third of the stocks in the mid-cap segment are priced below their five-year average valuations, while almost half of the stocks in the small-cap segment are trading below their five-year average valuations. A ‘bottom-up’ investment approach with a multi-cap policy can work well.
In contrast, some institutional investors see a higher ‘margin of safety’ in large-cap stocks. Hiten Jain of Invesco Mutual Fund said in an ET report that at the index level, large-cap shares are trading below their long-term average valuations, while mid-cap and small-cap shares are trading above it. This difference indicates that large-cap stocks have more latitude in terms of valuation and better ‘margin of safety’.
It is expected that there will be fluctuations in the earnings of companies in the near future. Initial gains will be seen in commodity, metal, mining and some energy companies, which are benefiting from high oil prices. However, asset managers expect the scope of earnings growth to expand once tensions ease and supply chains normalize and include financial, consumer, industrial and healthcare sectors.
