Summary of this article
Indian equities have delivered weak returns for nearly two years
Earnings, valuations and global cues could shape the market’s next move
Investors should review stocks and funds instead of exiting on volatility
The stock market has been stuck for over two years, and anyone who started investing around mid-2024 is sitting on returns close to zero.
This week marks two years since Indian equities turned after a sharp bull run. The Nifty 50 traded below 23,000 in June 2024 and remains below that level as of September 28, 2026.
The broader market has not offered much relief either. The Nifty Midcap 100 is around its two-year level, and the Nifty Smallcap 100 is also close to where it stood in September 2024.
The Nifty had hit a record 26,277 on September 27, 2024. It is now more than 13 per cent below that level. Similarly, Sensex had hit 85,978.25 on the same day, and now it is down more than 15 per cent.
The market's turn began in the final days of September 2024. Foreign portfolio investors, concerned about stretched Indian valuations and encouraged by China's fresh stimulus measures, began booking profits and shifting money elsewhere. October 2024 became the worst month for foreign fund outflows at that point.
Muted first-half earnings in 2024 added to the concerns. The following year brought another shock as US tariffs of up to 50 per cent on several Indian goods hit export sentiment. The rupee breached 90 per dollar for the first time in December 2025.
Nifty 50 earnings grew only around 3 per cent in FY25, according to NSE’s Market Pulse, while growth of roughly 7 per cent was expected for FY26. Foreign investors pulled out Rs 1.66 lakh crore from Indian equities in calendar year 2025. Domestic institutions and retail investors, however, continued investing, helping prevent a deeper correction in the benchmark.
War, Crude And The Rupee Add To The Pressure
2026 has brought another major risk: the US-Iran war. Hostilities in West Asia began on February 28, 2026, with US and Israeli military operations. The conflict has disrupted oil flows through a critical shipping route, pushing Brent crude to around $106 a barrel on September 28, 2026.
That is a significant concern for India, which imports over 85 per cent of its crude oil requirements. Higher oil prices can widen the country's import bill, put pressure on inflation and weigh on the rupee.
The currency has already weakened from around 85 per dollar to about 95 since January 2025, reducing dollar-denominated returns for overseas investors.
Foreign investors have now withdrawn a net Rs 2.41 lakh crore from Indian equities in 2026, already exceeding the Rs 1.66 lakh crore they pulled out during the whole of 2025.
The pressure is not limited to foreign flows. The Nifty and Sensex both ended lower for the seventh consecutive week last week, while a sharp rise in US Treasury yields added to concerns around emerging-market assets.
A flat index also masks the damage in individual stocks. Investors in the average stock may have fared worse than the Nifty suggests. Waiting is not comfortable when the portfolio has gone nowhere for two years. The question is whether it is still the right call.
Why The Two-Year Wait May Not Be Unusual
Harsh Gupta Madhusudan, chief equity strategist at Ionic Asset, says a two-year period of consolidation is not unusual during a long growth cycle.
"Time correction of a couple of years is not that unusual during long growth spurts, though in a post-Covid environment that feels unusual for many new investors," he said.
He believes valuations have become more reasonable, even though smaller companies trade at higher multiples.
"For smaller companies, valuation multiple is higher but so is growth," he said.
He added that the broader market is trading at around 19 times forward earnings.
"Even with low double-digit earnings, the broad market is trading at forward 19 times, which is an attractive risk-reward given that India is a sustained and diversified growth story over the next generation with capital-efficient companies and improving corporate governance," he said.
Madhusudan also sees a supportive global setup.
"US m-cap/GDP is around twice as India's, and the broad real dollar is near a cyclical high and has already turned, which bodes well for Indian markets," he said.
Earnings Could Provide The Next Trigger
The September quarter earnings season could provide an important test for the market.
"Broadly decent or somewhat strong September quarter results, even if ex-OMC, will be a confirmation of the earnings momentum and hence a boost given reasonable valuations; this is likely given high frequency indicators remain positive," Madhusudan said.
He also believes a weakening AI trade could help Indian equities.
"If the AI trade gradually weakens, which is plausible with the two prop LLM lab IPOs getting delayed (due to price competition) it may help," he said.
On the rupee, he sees room for improvement if geopolitical tensions ease.
"USD-CNY has moved from 7.4 to 6.7 over the last year and a half, and that bodes well for the rupee (and Indian equities) given FCNR reserves provided Middle East situation somewhat stabilises," he said.
His biggest concern remains a sharp US market correction.
"Only a big crash in the US is the major worry at this point, which is unlikely over the short term given the Fed's faster and faster reaction function," he said.
Staying Invested Does Not Mean Holding Everything
Sachin Gupta, vice president of research at Choice Broking, takes a more cautious approach.
"For investors who have seen little or no returns, the focus should be on understanding whether the underperformance is temporary or reflects a change in the underlying trend," he said.
He is watching whether the broader market and quality stocks hold key long-term support levels.
If "the index and quality stocks continue to hold important long-term supports and gradually form higher highs and higher lows," it can "indicate that the broader trend remains constructive despite periods of consolidation," he said.
However, staying invested does not mean holding every stock indefinitely.
"Persistent weakness, breakdowns below major support levels or deterioration in price and volume patterns should prompt a portfolio review," Gupta said.
"Therefore, staying invested should be accompanied by technical and fundamental review, rather than simply holding positions indefinitely or exiting based on short-term volatility," he added.
What Could End The Market's Long Wait
Gupta believes a sustained improvement in global risk sentiment could help Indian equities move out of the current weak phase.
"Easing geopolitical tensions, softer crude oil prices, greater clarity on the US interest-rate outlook and moderation in US bond yields could improve investor confidence and reduce pressure on emerging markets," he said.
A revival in foreign inflows, along with continued domestic institutional support, could further improve sentiment.
Crude prices, US Treasury yields, the rupee, foreign selling and developments in West Asia remain key market cues. A meaningful improvement in some of these factors could change the market's risk-reward equation.
"If global uncertainties ease while India's domestic fundamentals remain resilient, investor confidence could improve and create the conditions for a broader recovery in equities," Gupta said.
The Question Investors Should Ask Now
Neither expert is putting a timeline on a market recovery or suggesting that investors should hold every stock forever.
Two years of weak returns can be frustrating, particularly for those who invested near the 2024 peak. But a prolonged period of consolidation does not necessarily mean the longer-term story is over.
For investors who have already waited two years, the more important question may be whether the stocks and funds they own are still worth holding.
That means looking at earnings, valuations, business fundamentals and the investor's time horizon, rather than simply how long the market has remained flat.
