Expert view: Gaurav Bhandari, CEO of Monarch Networth Capital, is positive about the Indian stock market and believes that recovery may be closer than most people think. In an interview with Mint, Bhandari emphasised the importance of discipline and said investors must continue their SIPs without interruption. Edited excerpts:
Nifty has delivered negative returns over the last two years. How far is the recovery?
The Nifty peaked at 26,373 on 5 January 2026 and currently trades near 24,000, a year-to-date (YTD) decline of over 8%. Over the past 12 months, the index has been down 4%.
So yes, the headline numbers have been disappointing for investors who entered at the peak. But let me offer a different lens.
The correction has been valuation-driven, not fundamentals-driven.
Corporate earnings for the Nifty 500 grew 15.6% in FY26. Banking sector NPAs are at a 15-year low.
India’s GDP continues to grow at 6.5-7%. The underlying economy is doing precisely what it should be doing; the market simply got ahead of itself in September 2024 and January 2026 and has been correcting the excess.
From a valuation standpoint, the Nifty is now trading at approximately 20 times trailing PE, well below its 5-year median of 22 times.
The 52-week range of 22,182 to 26,373 tells you the story: we’re closer to the bottom of the range than the top.
Historically, buying at these valuations has consistently delivered strong 12-18 month returns. The recovery, in my view, is closer than most people think.
What should be our investment strategy during periods of prolonged downtrends?
What works, unfailingly, across every market cycle in history, is discipline. First, continue your SIPs without interruption.
SIPs are engineered for exactly these phases. Second, review your asset allocation. If equities have fallen and your allocation has dropped below your target, this is the time to rebalance.
Third, focus on quality. During bull markets, everything goes up. During corrections, only quality survives.
Stay with businesses that have strong and predictable cash flows, low or zero debt, high return on capital employed, and management with skin in the game. These businesses recover first and compound the hardest.
How frequently should we tweak our portfolios?
Frequent switching is one of the biggest destroyers of long-term wealth. And paradoxically, it’s one of the most common behaviours among Indian retail investors.
I would recommend reviewing your portfolio once a quarter — and that too, not to make changes, but to assess whether your original thesis is intact.
Changes should be triggered by only three things: a fundamental deterioration in the business you’ve invested in, a significant shift in your personal financial goals, or a meaningful deviation in your asset allocation due to market movements.
Are you bullish or bearish on Indian equities for the rest of 2026? Please explain your stance.
Constructively bullish, with a caveat. I am bullish because the fundamentals have not deteriorated.
Corporate India delivered 15.6% earnings growth in FY26, in line with long-term averages.
The banking sector is reporting the cleanest balance sheets in over 15 years. Government capex continues at unprecedented levels. And most importantly, domestic retail participation has reached a structural threshold that is now self-sustaining, with SIP inflows of ₹31,781 crore in June 2026, 9.78 crore active SIP accounts, and 63 consecutive months of positive equity fund inflows.
This is not speculative capital; this is household savings flowing into equities as a long-term asset class. That structural shift is irreversible.
Valuations have also corrected to levels that offer a genuine margin of safety.
The Nifty at 20 times trailing PE is not expensive by any historical measure. In fact, it’s at the lower end of its 5-year range.
The caveat is geopolitics. The Middle East situation remains the wildcard. Elevated crude oil prices directly impact India’s current account, inflation trajectory, and fiscal math.
If crude stabilises or declines, the recovery in Indian equities could be swift. If it escalates further, we may see an extended consolidation.
My base case: the second half of CY2026 will be meaningfully better than the first half. FII selling, which crossed $13 billion in 2026, is showing signs of exhaustion.
Domestic flows remain robust and growing. And the market is now pricing in most of the known risks. For investors with a 12-18 month view, this is a zone of accumulation, not a zone of fear.
Why has India’s healthy economic growth not translated into a durable bull market?
This is perhaps the most important question investors should be asking, and the answer lies in understanding that GDP growth and market returns are not the same thing.
India’s economy has been growing at 6.5-7% consistently. Corporate earnings have compounded at double-digit rates. And yet, the Nifty has been flat to negative for nearly two years. Why?
First, valuations ran ahead of fundamentals. In September 2024, the Nifty was trading at 24-25 times trailing PE. At those levels, even robust earnings growth gets absorbed by valuation compression. The market needed to pause and let earnings catch up with prices. That is exactly what has been happening , a time correction more than a price correction.
Second, capital flows have been decisively unfavourable. FIIs have been persistent sellers throughout this period, over $13 billion in 2026 alone. When the largest pool of institutional capital is exiting, even strong fundamentals cannot prevent short-term price declines. The FII selling has been driven by a stronger US dollar, attractive US Treasury yields, and global rebalancing towards the AI trade, none of which has anything to do with India’s economic health.
Third, external shocks. The US-Iran tensions, elevated crude prices, and global trade uncertainty have weighed on sentiment. India, as a net crude importer meeting 85-90% of its demand through imports, is disproportionately impacted by every spike in oil.
The good news is that all three headwinds are temporary. Valuations have corrected to reasonable levels. FII selling is showing fatigue. And geopolitical situations, by definition, normalise.
When these headwinds reverse, and they will, India’s underlying economic growth will translate into market returns with force. The fundamentals are a loaded spring. The market is just waiting for the trigger.
The strong influx of retail investors has been a key driving force of the market. Don’t you think poor market performance has a risk of derailing retail momentum?
The data says the opposite of what the fear suggests.
SIP inflows hit a record ₹31,781 crore in June 2026, a three-month high, precisely during one of the worst market phases in recent memory.
Active SIP accounts have grown to 9.78 crore. The share of investors below 30 years has increased from 22.6% in 2019 to 38.4% in 2026.
Indian equity funds have recorded 63 consecutive months of positive inflows through every correction, every geopolitical shock, every FII selling wave.
This is not momentum. This is a structural, generational, irreversible shift in how Indian households allocate savings.
The Indian retail investor of 2026 is fundamentally different from the one who entered in 2007 and exited in 2009.
Today’s investor understands SIPs, understands rupee cost averaging, and critically, has lived through two major corrections, COVID in 2020 and the current phase and has stayed invested through both. That is maturity, not fragility.
Will there be some attrition at the margins? Of course. Some investors who entered expecting quick returns will get disillusioned and leave.
But the structural core, the SIP investor doing ₹5,000-10,000 per month, consistently, month after month, is not going anywhere.
This cohort is now the single largest stabilising force in Indian equity markets.
In March 2026, when FIIs sold aggressively, it was domestic mutual funds, fuelled by SIP inflows, that absorbed the selling and prevented a crash. That would have been impossible five years ago.
If anything, the current correction is strengthening retail resilience, not weakening it. Every month an investor continues their SIP through a downturn, their conviction deepens, and their cost base improves.
What sectors are you betting on at this juncture? Why are you positive about them?
These sectors stand out clearly:
First, banking, particularly PSU banks. This is my highest conviction call. PSU banks are delivering ROEs that now rival private banks , at one-third the valuation.
Combined net profits of PSU banks have climbed to nearly ₹1.98 lakh crore in FY26, up from just ₹31,820 crore in FY21, a 6 times jump in five years.
Gross NPAs have fallen from 9.11% to 1.93%. Credit growth is running at 12-17% across the board. And yet, most PSU banks still trade at just 1-1.5 times book value versus private banks at 2.5-3 times.
The NPA cycle that haunted this sector for a decade is firmly behind us. What we’re witnessing now is a structural improvement in profitability, not a cyclical bounce.
Second, capital goods and infrastructure. Government capex is at an all-time high, and order books for companies in roads, railways, defence, and urban development are at record levels.
The private capex cycle is also beginning to turn, which will provide the next leg of growth.
This is a multi-year structural theme with at least 5-7 years of runway remaining.
Companies with strong execution track records and diversified order books are well-positioned.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
