Equity Monthly for April 2026

Markets reacted negatively to the persistent West Asia crisis. Following table shows the change in broad market cap indices. On the global front, the US (S&P 500 Index) & Emerging Market Index had a similar declining trend.

Table 1: Performance of Major Indices during the Month

Source: Bloomberg, Data as of 31^st March 2026.
Past performance may or may not be sustained in the future.

Key factors which can decide the market direction in the medium term are:

Energy Security

West Asia crisis has resulted in an oil price spike, beyond $ 100 levels. The critical Strait of Hormuz accounts for half of energy imports into the country. As per the statement from Ministry of Petroleum and Natural Gas, India has assured supply of crude oil for 60 days irrespective of the progress of war at West Asia. While Gas supply to households is un-interrupted, industrial supply is affected.

Production activity in certain manufacturing units has come to a halt for lack of fuel supply. Our channel checks suggest migrant workers in certain manufacturing hubs are asked to return home. Second order impacts would be beyond manufacturing industries. For instance, real estate project deliveries could be impacted by lack of ceramic tiles and can subsequently defer consumer durable demand. A prolonged crisis would have an impact on domestic consumption and discretionary spending.

Flows

DII (Domestic Institutional Investors) inflows at $ 15.4 bn have outpaced FPI (Foreign Portfolio Investors) outflows at $ 12.1 bn (Source: Bloomberg; NSDL). Higher crude prices along with pressure on capital inflows could pose pressure on currency. A weakening currency along with persistent global uncertainties would have a bearing on FPI flows. Majority of stocks recorded returns were lower than index returns over the past year. The following table shows the return range of BSE 500 stocks over the past year.

Table 2: 1-Year Return Range of BSE 500 Stocks

Source: Ace Equity; Data as of 31^st March 2026.
Past performance may or may not be sustained in the future.

Though domestic investors continue to show maturity in the current crisis, a long-drawn crisis and subsequent muted returns could eventually impact domestic flows.

Domestic Macro

The 125bps interest rate cuts, benign inflation, good monsoon and consumption boost from tax cuts and GST rationalization were expected to support the economic growth in the medium term. Persistently high fuel prices and its impact on inflation could offset some of these benefits. While near term fuel prices are difficult to predict, long-term structural drivers like electrification could keep a check on prices in the medium term.

What can an Investor Do?

Though near-term earnings trend is linked to global developments, valuations have become conducive in many pockets (Refer Table 3). While short-term disruptions would have a bearing on near-term market movements, the impact on the intrinsic value of companies would be limited. Investors may consider staggered allocation to equities to take advantage of favorable valuations and benefit from the near-term potential volatility.

Table 3: Current Vs Historic Valuations of major indices

Source: Bloomberg; P/E: Price to Earnings; P/B: Price to Book; Data as of 31^st March 2026.
Past performance may or may not be sustained in the future.

Above article is authored by Quantum.

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