Indian equities have joined the recent rebound in global markets, with nearly 94 per cent of Nifty and BSE-200 constituents delivering gains in April, yet benchmark indices continue to lag major global peers, according to a strategy report by Motilal Oswal Financial Services.
The Nifty 50 remains around 8 per cent below its September 2024 peak and nearly 5 per cent below pre-war levels, even as several global indices have surged to fresh highs following the March sell-off.
“This broad-based recovery is in line with global markets. India, however, is lagging,” the report said.
Global markets are currently pricing in 20–40 per cent earnings-per-share (EPS) growth, compared with India’s expected 18 per cent growth, making corporate earnings the key driver for future market returns.
Fund flows
The US, South Korea and Taiwan markets have outperformed, driven largely by strong global fund allocation towards artificial intelligence and semiconductor manufacturing themes, where India has relatively lower exposure, it said.
At the same time, domestic institutional investors (DIIs) continued to provide strong support to the market amid sustained foreign selling. DIIs invested $5.4 billion in April, marking the 12th month of significant buying activity, barring February 2026.
In contrast, foreign portfolio investors (FPIs) have remained net sellers of Indian equities this year, pulling out around $21 billion, while DIIs have infused nearly $33 billion during the same period.
The brokerage said commodity prices, particularly crude oil, remain a major near-term risk for Indian equities and corporate profitability.
“If crude remains above $100, it will squeeze corporate margins,” the report said.
Crude impact
Elevated crude prices are closely watched by markets as India imports more than 80 per cent of its oil requirements, making sectors such as aviation, paints, chemicals and consumer goods vulnerable to input cost pressures.
On valuations, MOFSL said large-cap stocks currently offer better comfort compared with the small- and mid-cap segments. The Nifty-50 is trading at 19.1 times forward earnings, around 9 per cent below its long-period average, while small- and mid-cap indices continue to trade at premium valuations.
“SMID continue to trade at a premium, suggesting a more stretched risk-reward profile in those segments,” the report said.