‘Can't expect runaway mkt with such heavy supply’

India is in a better position, and 2026 appears to be an improvement over last year, according to Ashish Gupta, chief information officer (CIO), Axis Mutual Fund.

- Dipti Sharma [e-mail]

“But with such heavy supply, you can’t expect a runaway market,” he said. Edited excerpts:What's the mood in the market right now?

About a year ago, expectations were high that the market would continue delivering very strong returns. We could sense this, for example, in the heavy oversubscription in the retail category in IPOs. There was also a lot of chasing returns, and investors were moving down the market-cap curve. That has moderated. People are investing with more circumspection. Flows are coming across the market-cap cohort, and interest in multi-asset products has grown as investors have seen the benefits of diversification this year. Overall, investor inclination towards equity has sustained, and it continues to draw much more interest than debt. That said, many of the excesses we were seeing a year ago have now eased.

Your take on valuations?

Valuations have also moderated. The large-cap index and broader market have not moved significantly, and the small-cap index is actually down over the last 12 months. Earnings growth has been positive, resulting in a 10% overall easing of PE (price-to-earnings) multiples. We also have better visibility for next year, as this is the first quarter in five-six quarters without an earnings downgrade. So the valuation premium versus a year ago has clearly moderated. Even more so, relative to global markets that in 2025 have seen a strong equity rally, with many markets up 20-60%, India has largely stayed out of it. Valuations aren't the main concern now.