March Pulse - Sage Views - Markets at a turning point
- Nikhil Gupta
- Mar 12
- 3 min read
Updated: Jul 29
"Volatility is the price of admission—the prize inside is superior long-term returns." — Morgan Housel
Dear Investor,
Indian equity markets saw a sharp sell-off in February 2025, led by mid- and small-cap stocks, which corrected 11% and 13%, respectively. Nifty was down -5.9% in February, pulled by Metals (0.1%) and Financials (0.1%); dragged by IT (-1.6%), Discretionary (-1.3%), Staples (-0.8%), Industrials (-0.7%), Energy (-0.6%), Health Care (-0.4%), Materials (-0.3%), Utilities (-0.3%) and Comm. Services (- 0.2%). The sell-off was driven by US tariff-led uncertainty, weak corporate earnings for Q3FY24 -25, and strong outflow from foreign institutional investors (FIIs) while DIIs were net buyers.
One-year rolling returns are almost negative, while 6 months are largely demotivating for investors however it looks like we might be around the turning point from here on.
Market Outlook: We see high-frequency indicators in favour of markets taking a positive trend in the near future. From what we expect, Q4 results should be better than last quarter and we will gradually see our earnings gain momentum from Q2 onwards. This brings us to the conclusion that H2 2025 will be better for markets as well as investors. Nifty is currently trading at 18.1x one-year forward PE, midcap index at 26.6x, and smallcap at 19.4x. India’s Q3FY25 GDP print was as expected at 6.2% growth over an upward-revised FY24 growth, indicating that growth has rebounded in the second half while inflation eased ahead of expectation.
What should investors do?
From what we have experienced, most retail investors have kept their cool over the last 5 months and it will be worth it. We strongly recommend investors to wait it out for the last few weeks as we see markets to again turn tide in the coming months. For investors who might believe that markets might correct further, the answer is we don’t know by how much they would correct however by looking at valuations we believe that these are good levels to enter the market and it will be wise to increase your SIPs and also add more lumpsum investments in your existing portfolio. 3-5% here and there won’t harm anyone and no one can really time the market accurately, not even the smartest of fund managers or market veterans.
We have given an illustration of three investors who behaved differently during the 2020 Covid market crash in March and the returns in December 2020 are clearly in the favour of the investor who stayed put. This has been the case in every correction/crash/bear market whatever you would like to call it.
If you are having a tough time managing your portfolio during these volatile times, connect with us to help you navigate through these volatile times.
In the current market scenario, we bring a quote by one of the greatest investors of all time, Peter Lynch: “Far more money has been lost by investors trying to anticipate corrections than has been lost in the corrections themselves”
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Happy Investing!
Warm Regards,
Nikhil Gupta
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