The highs that haunt: Sensex and Nifty still chasing last year's peaks

The summit slips from view: Midcaps trail, FPIs exit, domestic liquidity clings to the ledge

A year ago, Indian equities scaled lifetime highs, with the Nifty reaching 26,277 and the Sensex approaching 86,000. Since then, both indices have remained more than 6 per cent below those peaks. 

The total market capitalisation (mcap) of BSE-listed companies now stands at ₹450.6 trillion, down from a record ₹478 trillion. Just last week, the gap had nearly closed, with mcap less than 3 per cent short of a fresh peak. 

Broader markets have lagged further. The Nifty Midcap 100 and Nifty Smallcap 100 remain 7 per cent and 11 per cent below their respective highs, highlighting the relative resilience of larger companies during a volatile year. Fresh listings have also supported overall mcap. 

While the indices are roughly 6 per cent lower year-on-year, valuations are at least 10 per cent cheaper when adjusted for earnings growth. Analysts cite strong domestic liquidity as a stabilising factor, which has offset nearly ₹2.7 trillion in foreign portfolio investor (FPI) outflows over the past 12 months. 

Several strategists now see opportunities emerging. 

“Although foreign funds have withdrawn substantial sums from India over the past year — a period in which the market seriously underperformed — local investors have remained resilient. Earnings growth expectations might soften slightly, but valuations are no longer a concern. Government policy is increasingly supportive, and most foreign funds remain lightly positioned. We believe Indian equities look attractive,” said Herald van der Linde, chief Asia equity strategist at HSBC, in a note raising India’s rating to ‘overweight’ from ‘neutral’. 

Still, the broader trend shows weakness amid ongoing FPI selling, US tariffs, and a softening rupee.