MC EXCLUSIVE  Investors are capitulating; it’s time to start investing: Sunil Singhania

Sunil Singhania, founder and CIO, Abakkus Asset Management

• Investor fear peaks in Indian equities, hinting at potential buying opportunities.
• SIP flows remain resilient as mutual fund investors avoid panic selling
• Singhania's team invests in stocks with profit growth and fair valuations.

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Investor capitulation is setting in across Indian equities, creating conditions that signal it may be time to start deploying capital, Sunil Singhania, founder and Chief Investment Officer, Abakkus Asset Management, said in an interview with Moneycontrol. He said panic-driven selling and a surge in stocks hitting fresh lows suggest fear is peaking in the market.

“The sentiment among investors isn’t great. Direct investors have not made any money — in fact they’ve lost money — so sentiment is obviously hit. There is a capitulation happening in the market,” Singhania said. However, he noted that systematic investment plan (SIP) flows remain resilient because mutual fund investors have largely stayed invested and avoided losses. “People have not lost money in funds as they stay invested, so those investments will continue,” he said.

Despite the nervousness in the market in the past few sessions, Singhania said multiple macro and market parameters are beginning to stabilise. “2026 has started with a lot of news flow and concerns, and on the face of it things look very challenging and stressful. But a lot of parameters are starting to show signs of scare at the peak,” he said.

On near-term earnings, Singhania said investors should not expect major surprises. “There won’t be any positive surprises this quarter, nor will there be disappointments. But there will be an impact of the new gratuity rules on earnings,” he said.

Besides, he added that corporate balance sheets remain steady and healthy, while macro indicators are also stable. Profit growth, however, remains constrained by the external environment, with earnings currently stuck at around 9–10%.

On the global front, Singhania said what he described as “Trump mania” appears to be peaking, with resistance building across major economies. “The US is about 25% of the world’s economy, but over the next 10–15 years that could fall to 17–18%. Today nearly 75% of the global economy is in sync that this has gone too far,” he said.

He cited developments such as discussions around a potential large free trade agreement between India and the European Union, along with the upcoming Union Budget, as important factors that could reset market expectations.

Against this backdrop, Singhania said his team has already begun increasing investments. “Looking at the fear in the market, I would really say it’s time now to start investing. We are certainly doing this. Over the last week we have been investing aggressively,” he said.

Singhania said the strategy is focused on companies with visible profit growth where valuations remain reasonable. “It is about stocks where there is visible profit growth and valuations are not out of whack,” he said.

Singhania earlier noted in a CNBC TV18 interview that he would not bracket opportunities in the market as large-cap, mid-cap and small-cap; some of the steepest declines have been seen even among large-cap index stocks, with several falling more than 10% over the past two weeks, he said. “It’s not just mid and small caps,” he said. The small-cap correction, he said was also because, earlier, the category had seen sharp multiple expansion without corresponding earnings growth. “In small caps in particular, multiples moved up significantly and earnings did not keep pace with expectations. That’s why selectively you see stocks falling more,” he said.

He warned investors against chasing momentum, calling it a double-edged sword. “Momentum is very pleasing if you’re on the right side and equally painful if you’re on the wrong side,” he said, adding that many stocks investors were eager to buy just three to six months ago are now being avoided as prices fall. “Falling knife — no one wants to catch it.”

Singhania said his team is becoming more proactive even in mid- and small-cap stocks where valuations are turning attractive. “We are trying to see where we can get value,” he said.

He also highlighted the role of forced selling in accelerating declines. “Margin funding trades get unwound, particularly in the first two to three hours of trading. That kind of forced selling always happens,” he said.