DSP Mutual Fund Signals Shift in Equity Market Outlook Amid Ongoing Corrections
After the correction, DSP sees a shift in equities—but this is not a full-throttle buy signal
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DSP Mutual Fund's latest report indicates a notable shift in equity market dynamics, suggesting that while valuations are stabilizing, caution is still advised. The Nifty index is trading below 20 times earnings, and opportunities are emerging selectively, particularly in large-cap stocks, despite ongoing market stress.
- 01DSP Mutual Fund is adjusting its conservative stance on equities, suggesting a moderate increase in exposure.
- 02The Nifty index is trading at approximately 19 times earnings, aligning with historical averages.
- 03Large-cap stocks in banking, IT, healthcare, and FMCG are becoming more attractive due to lower valuations.
- 04Market breadth has weakened, indicating underlying stress despite the index's performance.
- 05Investors are advised to adopt a gradual approach in increasing equity exposure, focusing on quality stocks.
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DSP Mutual Fund's April 2026 Netra report highlights a shift in the equity market, moving away from a conservative stance as valuations begin to stabilize. The Nifty index is currently trading at around 19 times earnings, close to its long-term average of 18.9 times. While this suggests that the market is not becoming cheaper across the board, large-cap stocks, particularly in sectors like banking, IT, healthcare, and fast-moving consumer goods (FMCG), are now trading at or below historical averages. In contrast, small- and mid-cap stocks remain elevated, indicating that adjustments in this segment may still be ongoing. Market indicators show signs of stress, with weakened breadth and increased volatility, as evidenced by the India VIX. Despite these challenges, external factors such as a weaker Indian rupee may improve foreign investor interest. DSP advises a cautious approach, recommending gradual increases in equity exposure while focusing on high-quality businesses. Investors should be prepared for changes rather than attempting to time the market's bottom.
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Investors may find opportunities in large-cap stocks, potentially leading to better returns as valuations stabilize. However, caution is warranted in small- and mid-cap segments due to elevated valuations.
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