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.
FPIs net sold equities worth Rs 1.7 trillion in 2025 -- the highest annual net sale on record.
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.'
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.
Shares of Reliance Industries Limited (RIL) tumbled on Tuesday, posting its biggest single-day decline in 19 months, amid controversy over its purchase of Russian oil and profit-booking after recent gains.
Investing in gold trumped most other asset classes in terms of compounded annualised returns over the long term, suggests a report by FundsIndia.
Unless the primary market momentum slows, smallcap stocks will stay subdued.
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).
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.
'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.
So far this year, the rupee has fallen by 4.2 per cent, the worst among its Asian peers.
'The frenzy for gold is primarily due to the uncertainty surrounding the tariff war.'
'I expect IT stocks to trade lower for some time. They are unlikely to make money for investors.'
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.
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.
Concerns over weakening demand for Indian pharmaceutical (pharma) drugs in the US - their largest export market - have weighed heavily on investor sentiment this year. While the Nifty 50 has gained 6.02 per cent year - to - date (as on September 15), the Nifty Pharma index has declined 5.18 per cent, National Stock Exchange data shows.
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.
'It's better to stay away from large IT stocks until there is clarity on tariffs.'
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.
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.
Analysts expect Nifty to rise up by to 6 per cent in six months, with intermittent corrections likely due to global factors.
The surge in the market price is also attributed to demand by retail and high-networth individual investors ahead of the IPO.
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.
'If the US stagnates and falls into a recession, the dollar will weaken, oil prices will also dip. This augurs well for India.'
On average, stocks that debuted last year are down 37 per cent from their peak levels.
The interplay between domestic and foreign capital will shape India's equity markets.
Retail investors have been the hardest hit in the recent market downturn, with stocks where they hold over 20% falling 45% from their 52-week highs.
Since October, FPIs have offloaded Indian equities worth Rs 2.1 trillion.
Small and midcaps are leading the charge in the latest market rebound. Since November 21, when the benchmark S&P BSE Sensex and the National Stock Exchange Nifty hit their recent lows and slipped into correction territory, the Nifty Smallcap 100 index has risen by 8 per cent, while the Nifty Midcap 100 has gained 5.7 per cent. Meanwhile, the Nifty 50 index has risen by 4.7 per cent during this period.
618 companies were part of the billion dollar club when the markets reached all-time highs on September 26, 2024. That number has fallen to 500 following a $1 trillion wipeout in India's market capitalisation amid relentless selling by FPIs.
The sharp pullback in mid and smallcap stocks signals a cooling-off period in segments that previously attracted considerable investor interest.
Buying stocks during a dip, says Amar Nandu, research analyst, Samco Securities, can lead to higher compounding returns when the uptrend begins.
The recent selloff in the Indian equity market has been far more painful for mid and smallcap stocks compared to largecap stocks. The benchmark BSE Sensex is now down 9.5 per cent from its record monthly closing of 84,300 at the end of September last year. In the same period, the BSE MidCap has lost 17 per cent of its value, while the BSE SmallCap has corrected by 17.1 per cent.
The last time these two indexes recorded a negative performance on a calendar year basis was in CY19.
Rupee depreciation, if it continues, will likely pull the markets down further. Since September 2024, the rupee has declined by 3.1 per cent, the Nifty has dropped by 8.5 per cent during the same period, and the Sensex has fallen by 7.3 per cent. If the decline continues, markets will need to brace for more pain as it could push foreign portfolio investors (FPIs) to exit their positions faster than anticipated.
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