India markets in a slowdown or a setup? Why seasoned investors see opportunity beneath the volatility

He points to earlier peaks in 2004, 2007, 2011, 2014, 2017, 2021 and most recently 2024, each followed by meaningful corrections.

• Market slowdown seen as cyclical, not structural by experts
• Large caps offer stability but require careful stock selection
• Small caps follow cycles, sharp rallies seen after corrections

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India’s equity markets may be stuck in a soft patch, but seasoned investors argue this phase is more cyclical than structural, and one that could eventually create attractive entry points across segments.

During a panel at the Crystal Gazing Summit, organised by PMS AIF WORLD, Vikas Khemani, founder and CEO of Carnelian Asset Management, said the slowdown seen over the last five quarters should be viewed as part of India’s natural economic journey. In his assessment, the country remains firmly in a structural growth phase, even as near-term growth moderates.

Cyclical slowdowns, Khemani argues, are not signs of deterioration but opportunities for long-term investors who maintain conviction through volatility. He also points out that attractive opportunities are emerging beyond listed equities. The pre-IPO space, according to him, can be rewarding—provided investors back the right businesses and stay invested through interim market swings.

At the large-cap end, however, comfort comes with caveats. Pankaj Murarka, Chief Investment Officer at Axis Asset Management, notes that large caps can still deliver relatively stable growth with lower volatility, but only if investors are positioned in the right names.

Simply owning large caps is not enough, Murarka cautions. The gap between steady compounding and stagnation increasingly depends on stock selection. He also flags artificial intelligence as a genuine structural shift rather than a passing trend. Large companies, with stronger balance sheets and greater adaptability, are better placed to absorb AI-led disruption. In contrast, he advises caution in small- and mid-cap businesses that could face displacement due to rapid technological change.

Small caps, meanwhile, continue to follow a familiar historical pattern. Samit Vartak, founder and CIO of SageOne Investment Managers, highlights that small caps tend to move in well-defined cycles, with market peaks typically occurring every 3.5 to 4 years.

He points to earlier peaks in 2004, 2007, 2011, 2014, 2017, 2021 and most recently 2024, each followed by meaningful corrections.

Seasonally, January and February are often weak for small caps, with recoveries usually beginning around April. Importantly, once a durable bottom forms, subsequent rallies have historically been sharp, delivering gains of 50 percent to as much as 150 percent.

Moderating the session, Kamal Manocha, Founder & CEO, PMS AIF WORLD, focused on seeking clarity in uncertain times, navigating discussions around India’s structural growth path, small-cap cyclicality with areas of future multi-bagger opportunities, pre-IPO investing, view on domestic IT companies, real AI risks, and the conviction of leading fund managers on Indian equities heading into 2026.

PMS AIF WORLD is India’s leading wealth services firm specialising in alternative investments, serving over 800 clients across Rs 2,200 crore in PMS and AIF assets. The firm follows a knowledge-first philosophy with the belief that when knowledge leads, wealth follows, and it focuses on delivering well-informed investing for its alpha seeking clientele.