Market cycles often test investor patience.
When valuations are expensive, discipline matters.
When opportunities return, conviction matters.
Veteran fund manager Prashant Jain, who maintained a cautious approach towards small and mid-cap stocks for nearly two years, is now seeing improving opportunities in select areas of the market.
What changed?
After almost two years of consolidation, market valuations have started becoming more reasonable.
The Nifty’s one-year forward P/E multiple has moderated to around 18.4x, broadly aligning with its long-term average, while India’s premium compared to emerging markets has also normalised.
At the same time:
✔ Economic growth remains resilient
✔ Corporate earnings momentum continues
✔ FPI ownership has reduced significantly
✔ Domestic investors have become a stronger force in Indian equities
Foreign investors reportedly sold nearly $61 billion of Indian equities over the 21 months ending June 2026.
However, consistent domestic inflows helped absorb volatility — showing how India’s investor base is gradually evolving.
The key lesson?
Great investment opportunities are rarely found when everything looks perfect.
They often appear after periods of:
• Consolidation
• Lower expectations
• Improving valuations
Small and mid caps can create meaningful wealth, but selectivity and valuation discipline remain critical.
Because successful investing is not about chasing what worked yesterday.
It is about identifying where the risk-reward is improving for tomorrow.
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