Nifty 50 Correction Pulls Index 14.5% Below September 2024 Peak

The Nifty 50 traded 14.5% below its September 2024 peak as of October 1, 2026, after falling 6.9% over the previous month. Fund managers attributed the deepening correction to elevated crude oil prices, higher global bond yields, monsoon-related concerns, and continued foreign portfolio investor selling.

Market Performance Across Segments

Why Crude Above $100 Is the Central Concern

Brent crude rose about 68% in 2026 and was trading at $102 per barrel as of the reporting date. Neelesh Surana, CIO at Mirae Asset Investment Managers India, said crude oil was the more important fundamental factor alongside the risk that higher global yields could signal a turn in the interest-rate cycle.

Shailesh Bhan, CIO-Equity at Nippon India Mutual Fund, said elevated oil prices make inflation and current account deficit management harder for India. Since India imports most of its crude oil requirements, a higher bill widens the gap between import payments and export earnings, putting pressure on the rupee.

Harsha Upadhyaya, CIO at Kotak Mahindra AMC, added that foreign investors assess returns in their own currency, making rupee stability a direct factor in equity flow decisions. He noted that FCNR-B inflows had provided some support but said crude staying above $100 per barrel could raise currency concerns if prices remained at those levels.

How FPI Selling Has Affected Large Caps

Foreign portfolio investors pulled out ₹35,861 crore, or $3.75 billion, in September alone. NSDL data showed net selling of close to $60 billion of Indian equities over the past two years.

The selling has disproportionately affected large caps because foreign investors typically hold a larger share of India’s biggest listed companies.

What Large-Cap Valuations Look Like After the Correction

The Nifty 50 now trades at about 17 times one-year forward earnings, roughly 11% below its 10-year average of 18.9 times. Surana said markets had corrected about 15% over approximately two years, while earnings growth over the same period compressed price-to-earnings multiples for many stocks by around 30%.

Large-cap companies reported 17.6% year-on-year earnings growth in the June quarter. Mid- and small-cap companies grew about 18-22%, but they still trade at higher valuations than large caps.

Why Fund Managers Look Beyond Headline P/E

Alok Singh, CIO at Bank of India Mutual Fund, said investors need to assess earnings growth alongside headline P/E multiples because earnings growth can lower the multiple even without stock price movement.

One tool is the price-to-earnings-to-growth ratio, or PEG, which divides the P/E ratio by expected annual earnings growth. A company at 30 times earnings with 30% growth has a PEG of 1. A company at 20 times earnings with 10% growth has a PEG of 2, meaning the lower-P/E stock is not necessarily cheaper per unit of growth.

Singh also cautioned that the Nifty 50 Equal Weight index, which assigns the same weight to every constituent, has not corrected as much as the market-cap-weighted index. That difference shows how a small number of heavyweight stocks can pull down headline valuations faster than the broader set of constituents.

Singh added that India’s high-frequency indicators were holding up and the earnings season should be reasonably steady.

Final Outlook

Source: Mint