Equity markets have been sideways for 18 months: Is it good time to invest?

The Indian equity markets started their sideways journey from September 2024, mainly due to expensive valuations, and saw a price correction in early 2025 and continued moving sideways during the entire period of the year, due to weak earnings growth, US tariff uncertainty and FII selling. The markets again turned volatile in 2026, due to updates on AI disruption and geopolitical tensions in West Asia. Thus, the multiple uncertain factors and fearful events over the past 18 months, have left the Indian equity markets jittery.

Over the last two quarters, the Indian economy has displayed strong GDP growth and many of the listed companies, especially within the Nifty 500 index, at aggregate have shown robust double-digit earnings growth.

The current market volatility is mainly due to global factors, but the fundamentals of growth in India remain intact. Unfortunately, it is very hard to predict market cycles, but the markets are expected to remain volatile and sideways till global uncertainties caused by geopolitical conflicts and AI disruption remain elevated.

During this phase, investors should not forget that the pain in the Indian equity markets caused by the prevailing geopolitical tensions and time correction will be temporary and the bounce will be inevitable.

We analysed the Indian equity markets during and past five violent events — Iraq war, Kargil war, World Trade Centre attack, Mumbai attack, and the Russia-Ukraine war — and found that during these times, the Sensex fell in the range of around -3% to -18%, but gained around 25% to 65% post these events over the next six months. Similarly, we also analysed 13 time correction periods from 2001, where the Nifty 50 gave no returns over 17-18 months and saw that post this period, the index generated around 30% returns in 12 months and around 76% returns in 36 months, on an average.

Looking at this data, one would argue that it is historical, but it is convincing enough to prove that volatility is temporary and equity markets eventually bounce back.

Over the past 17-18 months, from September 30, 2024, to March 13, 2026, large, mid-, and small-cap indices corrected in the range of -9% to -20%, price to earnings ratios (valuations) corrected sharply in the range of -20% to -34%, and earnings (EPS) saw a strong double-digit growth in the range of 10% to 38%. Valuations of large and small-cap indices are trading below their long-term historical averages and mid-cap valuations close to it. Prices and valuations of Indian equities within all three market caps have become very reasonable from their peaks, and with strong earnings growth seen, it clearly indicates ample margin of safety and tremendous upside opportunity from an investment point of view.

Keeping all the historical and current data in mind and the underperformance of Indian equity markets, compared with other global peers, tells us that these are good times and levels to invest in Indian equities, and it is just a matter of time for a strong bounceback once uncertainties subside.

Based on one’s goals, risk appetite, time horizon, and asset allocation, investors can look at investing in all three market caps (large, mid, and small). Rather than betting on individual stocks or sectors, it is wise to invest via the diversified mutual fund route. Investors can comfortably invest lumpsum or in a staggered manner, if they still feel jittery about the uncertainties. Those investors, who have exhausted their cash by deploying in 2025, need not worry as they too have invested within the time correction pocket and have not missed out on the upside opportunity.

Lastly, it is only by investing in such times that one can achieve superior returns in the equity markets, but at the same time, to achieve such returns, one will need patience with a medium to long-term horizon.

(The writer is Founder — Rupee With Rushabh Investment Services)