Markets ultimately follow earnings, but during broad-based sell-offs, very few stocks remain unscathed. Even fundamentally strong companies often get dragged down with the tide. This is evident in the performance of six Nifty 500 stocks that have declined by up to 35% in 2026 so far despite consistently compounding earnings.
The is down 13.5% year-to-date (YTD), after logging losses in all three months of the year. The latest sell-off has been triggered by escalating geopolitical , particularly the ongoing conflict involving the US, Israel and Iran, which has pushed .
As the world’s third-largest oil importer, India remains vulnerable to rising crude prices, which tend to widen the current account deficit, pressure the rupee, and trigger foreign portfolio investor (FPI) outflows. Even before this, headwinds such as subdued earnings growth and uncertainty around a potential India–US trade deal had weighed on market sentiment.
Fallen angels?
Despite these challenges, data from Capitaline shows that nine Nifty 500 companies reported a quarter-on-quarter (QoQ) increase of 5% or more in profit after tax (PAT) consistently between January and December 2025. However, six of these nine stocks have corrected sharply—falling up to 35% YTD—potentially creating opportunities in select beaten-down names.
The most-beaten-down stock in the pack, , has fallen 28% alone in a month, hit by the surging crude oil prices and disruption in the Strait of Hormuz. India imports ~65% of its LPG, of which 90%+ comes from the Middle East.
“The logistical chokehold due to blocking of the Strait of Hormuz/Red Sea is likely to hurt India’s LPG imports in the near term, which would have knock-on effects on throughput volumes for AVTL’s and Aegis’ LPG logistics assets,” JM Financial had said in a report dated March 11.
The stock had seen its profit rise from ₹37.8 crore at the end of the December 2024 quarter to ₹61.51 crore in the December 2025 quarter, with PAT rising consistently each quarter by 5% or more.
Financial stocks like SBFC Finance, Indian Overseas Bank, Home First Finance and have seen the stocks slump between 12-29% YTD despite steady earnings growth. Fears that rising crude oil prices could fan inflation and prompt the RBI to either hold or hike rates, which does not bode well for NBFCs and banks, as it raises funding costs. Additionally, like IOB hold large government bonds in their portfolios, and a spike in yields is resulting in mark-to-market losses.
“In a scenario of an extended war, higher inflation would result in narrowing the room for any potential rate cut the RBI would have otherwise undertaken. Intense competition amongst banks for deposits to support the buoyancy in credit growth could result in CoF being driven higher, thereby hurting margins for lenders. Furthermore, we see near-term pressure on treasury income for PSU Banks given the rising G-Sec yields,” said Axis Securities.
Meanwhile, Muthoot Finance — gold loan financier — has seen a reversal in its rally as the gold prices took a knock following profit taking and fears of inflation amid rising crude oil prices, which could prompt the US Fed to hold rates. Higher for longer rates weigh on non-yielding assets like bullion. It had posted a 6% QoQ rise in the March quarter of FY25, followed by 36%, 20% and 16% QoQ rise in Q1FY26, Q2FY26, and Q3FY26, respectively.
Kotak Institutional Equities (KIE) reports higher collateral values, driving stronger loan growth. While near-term credit risk appears low, caution is warranted as gold loans form a growing share of incremental growth. Sharp gold price swings or greater alternative funding could slow demand, and rising lender comfort across other products may dilute gold loan momentum and increase sensitivity to borrower behaviour, it opined.
Standing tall
Three companies, namely , and , have seen a 5% jump in shares despite the market meltdown, helped by their presence in sectors relatively insulated from the Middle East disruptions.
For investors wondering if these stocks can be good buys, Harshal Dasani, Business Head at INVAsset PMS, says that the right question is not whether profits have risen for four quarters, but whether the business can sustain that trajectory without stretching the balance sheet or trading at unrealistic expectations.
“Four straight quarters of 5% or more sequential PAT growth clearly point to earnings momentum, yet that momentum can sometimes be flattered by a low base, treasury gains, lower provisioning, policy support, or a temporary improvement in margins. A stock falling sharply this year does not automatically make it attractive either. In many cases, the market is simply discounting slower growth ahead, higher funding costs, execution risks, or valuations that had run ahead of fundamentals. So investors should treat such names as a shortlist for deeper work, not as ready-made bargain picks,” he opined.
Kranthi Bathini of Wealthmills Securities also opined that investors should not blindly pick these stocks and do due diligence, like understanding their future earnings and taking a stock of the valuations. He said blindly picking up beaten-down stocks is not a good idea.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.