Stocks of fast-moving consumer goods companies have taken it on the chin in calendar year 2026 (CY26) with the Nifty FMCG index falling over 6 per cent compared to the Nifty 50 dipping 0.8 per cent. Nifty FMCG is one of the worst-performing sectors on the NSE in CY26.
The BSE Smallcap index hit an over eight-month low of 47,627.96, falling 3 per cent in Tuesday's intraday trade amid selling pressure due to ongoing tariff-related concerns and rising geopolitical tensions.
'Retail portfolios were going nowhere even as headline indices moved higher, prompting investors to sell holdings and shift money to IPOs, attracted by listing-day gains.'
The post-Covid euphoria surrounding direct equity investing has ebbed in 2025. Individual investors have turned net sellers in the domestic equity market, pulling out about 8,461 crore so far this year - a sharp reversal from the record purchases seen in 2024, according to a report by the National Stock Exchange of India (NSE).
Over 50 per cent, or 660 stocks, from the BSE 1000 index recorded negative returns during CY25.
The surge has come alongside a decline in average issue sizes and more muted listing-day returns compared with last year.
Investing in gold trumped most other asset classes in terms of compounded annualised returns over the long term, suggests a report by FundsIndia.
Retail investors are moving away from a buy-and-hold approach and towards more informed short-term positioning, recent investment patterns show.
The Reserve Bank of India (RBI) on Friday delivered a 25 basis point (bps) repo rate cut analysts expected, driven by the strong 8.2 per cent GDP growth in the September quarter. However, analysts do not expect a runaway market rally as the impact of US tariffs continues.
Unless the primary market momentum slows, smallcap stocks will stay subdued.
So far this year, the rupee has fallen by 4.2 per cent, the worst among its Asian peers.
'The net inflows into MF schemes may also have been lower last month, with investors booking profit and taking a more measured approach amid elevated valuations.'
The strong domestic flow offset selling by foreign portfolio investors who pulled out $23.3 billion (Rs 2.03 trillion) from domestic equity markets in CY25.
'It's better to stay away from large IT stocks until there is clarity on tariffs.'
More than a third of 83 mainboard IPOs this year ended their debut sessions in the red, with losses of up to 35 per cent.
As the rally in precious metals takes centre stage in 2025, most analysts recommend a larger allocation to gold over silver despite the latter's outperformance this year. In the current calendar year (CY25), spot gold prices in dollar terms rallied
The sector's IPO pipeline is led by Tata Capital's Rs 17,000 crore issue, followed by ICICI Prudential Asset Management at Rs 10,200 crore and Billionbrains Garage Ventures at Rs 6,000 crore.
'I expect IT stocks to trade lower for some time. They are unlikely to make money for investors.'
Foreign portfolio investors sold stocks worth Rs 1.42 trillion in 2025, with their sales hitting Rs 12,257 crore in the first four trading days of September.
Global funds' assets under custody (AUC) in India have been flat this year, with a Rs 2 trillion drop in information technology (IT) holdings offset by gains in financial stocks. AUC is the total market value of equities held by FPIs.
Life Insurance Corporation (LIC) , the country's largest domestic institutional investor (DII), has seen a Rs 46,000 crore erosion in the value of its equity holdings amid market downturns in July. The benchmark indices, Nifty 50 and BSE Sensex, have slipped 2.6 per cent from their June 2025-end level to 24,837 and 81,463.09 respectively.
Brent crude oil prices can touch $150 a barrel (bbl) - up a whopping 103 per cent from the current levels - in the worst-case scenario if the Israel-Iran geopolitical tensions escalate, suggest analysts.
The surge in the market price is also attributed to demand by retail and high-networth individual investors ahead of the IPO.
'If the US stagnates and falls into a recession, the dollar will weaken, oil prices will also dip. This augurs well for India.'
Buying stocks during a dip, says Amar Nandu, research analyst, Samco Securities, can lead to higher compounding returns when the uptrend begins.
The last time these two indexes recorded a negative performance on a calendar year basis was in CY19.
The sharp pullback in mid and smallcap stocks signals a cooling-off period in segments that previously attracted considerable investor interest.
'As the markets are expected to remain jittery in the near term, we advise investors to use this opportunity to enter quality largecaps from a long-term perspective.'
As regards mid-caps and small-caps, analysts suggest investors buy only those stocks of those companies where there is earnings visibility for at least a few quarters and where the valuations have become reasonable.
'Invest only in stocks of those companies that deliver on earnings and there is earnings visibility too for the next few quarters.'
Automobile, apparel and electronics are among sectors that see a sales boost during the festival season, a time when investors expect gains in related stocks. This year could be different: Analysts have factored in all positives and do not expect such stocks to deliver lucrative returns. "Indian households spend across sectors like automobiles, consumer durables, and consumer staples during the festival season.
'Over the next 12 months, it will be difficult to make 15 to 20 per cent return in the markets as the valuations appear stretched.'
Analysts are of the view that long-term investors could continue to hold the stock, irrespective of the MSCI development.
'Though one cannot paint the entire microcap basket with the same brush, investors need to be careful now as to what they're buying.'
Domestic institutional investors pumped Rs 2.3 trillion into equities during H1 CY24. Of this, mutual funds contributed 80%.
'Expectations are high regarding the change in LTCG with respect to equity investments.'
'We expect market consolidation and recommend buying during market dips.'
Had you invested Rs 10,000 each in JSW Steel, Titan Company and Bajaj Finance 20 years ago, when they were just penny stocks (trading below Rs 10), you would have become a millionaire by now.
Analysts remain bullish on the road ahead for the equity markets, but warn against volatility on account of domestic and global cues. The upcoming Lok Sabha elections back home and the interest rate trajectory of the US Federal Reserve, they said, will be the two most important factors that the markets will keep a tab on. That apart, the valuation of the Indian markets, they feel, will also be eyed in context of how global peers are performing.
Investors are reluctant to take long-term positions this year after the spectacular gains in 2023. The delivery-based trades on the National Stock Exchange (NSE) have declined to below 36 per cent this year from an average of 38.1 per cent in 2023. Investors tend to seek delivery for stocks where they see a long-term investment opportunity or tactical positional trade.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances