Monarch AIF believes that broader markets have been in bear territory for the past few months and good opportunities are now emerging, as several small yet fast-growing companies are now available at one-year forward P/E of less than 20x
Headline indices such as the Sensex and Nifty continue to trade close to all-time highs (down just 3-5 per cent), but beneath the surface, the broader market is gripped by a ruthless bear downturn.
According to a latest report from Monarch AIF, about 80 per cent of the listed universe above ₹1,000-crore market capitalisation (m-cap) is in bear market category and would appear even more bleak if the companies below the ₹1,000-crore m-cap are included.
Indian markets have witnessed a phase of time and value correction in the last 18 months (since September 2024), with a peculiar phenomenon where broader listed universe is in bear market territory while indices are staying near all-time/52-week highs, it said, adding surprisingly the correction in main indices has been much lower at 3-5 per cent range and even the Nifty small-cap index has fallen only 13 per cent from its all-time highs!
“This kind of divergence is very rare and within each index, a narrow band of stocks have been driving the index returns in the last 9-12 months, while broader market remains in bear grip,” it further said.
Valuation comfort
The analysis by Monarch AIF shows that currently about 36 per cent of all stocks above ₹1,000-crore m-cap are trading at TTM P/E of below 25x (vs 25 per cent in September 2024). “This has made risk-reward favourable for bottoms-up stock picking, like it generally happens after any bear market.”
Monarch AIF believes that broader markets have been in bear territory for the past few months and good opportunities are now emerging, as several small yet fast-growing companies are now available at one-year forward P/E of less than 20x.
Major factors that will influence positively smaller companies include: earnings growth (bottom half set) has been strong and acceleration is likely in coming quarters, lower rates to provide fuel for smaller companies and series of reforms initiated in the last 10 years.
Published on February 27, 2026
