Equity markets may be approaching a turning point as macroeconomic stability, improving valuations and supportive policy developments strengthen visibility for investors, according to PL Asset Management. The firm said recent signals indicate markets are shifting from a corrective phase toward early recovery, even as near-term volatility persists.
The market moved through a period of consolidation in January amid global de-risking, currency pressures and commodity volatility. The Nifty 50 declined 3.10 per cent during the month as caution prevailed ahead of the Union Budget, elevated US bond yields and continued foreign institutional investor outflows.
Foreign investors sold equities worth ₹31,393 crore, while domestic institutional inflows of ₹43,793 crore and record systematic investment plan contributions of about ₹31,000 crore reflected the resilience of local liquidity.
Macroeconomic indicators remained supportive, the study read. Industrial production accelerated to a two-year high, goods and services tax collections reached ₹1.93 lakh crore, and foreign exchange reserves rose to a record $709 billion. Inflation stayed within the central bank’s comfort range, allowing room for policy flexibility. Equity valuations moderated toward roughly 19–20 times earnings, improving the medium-term risk-reward balance.
PL Asset Management noted that although market breadth weakened and leadership remained narrow, internal risk indicators are stabilizing.
The shift in sector positioning has also been notable. Value factors have recently outperformed, suggesting investors are repositioning portfolios in anticipation of broader participation. Equities trading near multi-cycle relative lows versus gold further reinforce the case for improved forward return probabilities as volatility moderates.
Policy and trade catalysts
According to PL Asset Management, structural visibility is improving as policy continuity and trade developments reinforce the macro backdrop. The Union Budget maintained a balance between fiscal discipline and growth, sustaining capital expenditure and infrastructure thrusts that support industrial and export-oriented earnings visibility. Stable inflation and external balances add to macro anchoring.
Trade linkages are emerging as important catalysts. The anticipated India–EU free trade agreement is expected to create structural earnings tailwinds from FY27 onwards, while a recently announced India–US trade deal reducing tariffs on Indian goods from 50 per cent to 18 per cent is seen materially boosting export competitiveness across key sectors. Together with valuation normalization, these factors indicate a potential transition from correction toward recovery.
Against this backdrop, PL Asset Management said its strategies demonstrated resilience. The AQUA strategy returned -0.63 per cent in January, outperforming its benchmark decline of 3.34 per cent, supported by an overweight stance on value and quality factors and selective exposure to higher-beta cyclicals. Since inception in June 2023, the strategy has generated cumulative returns of 22.10 per cent compared with 15.94 per cent for the benchmark.
The Multi Asset Dynamic Portfolio (MADP) strategy delivered returns of 3.56 per cent in January, while its benchmark declined 1.16 per cent. Over the past year it generated 22.1 per cent returns versus 9.46 per cent for the benchmark, and over three years produced annualized returns of 16.73 per cent compared with 13.07 per cent. The firm attributed performance to disciplined dynamic allocation across equities and gold based on macro and volatility signals, enabling improved risk efficiency and lower drawdowns.
Commenting on the outlook, Siddharth Vora, Head of Quant Investment Strategies and Fund Manager at PL Asset Management, said markets appear to be moving from correction towards normalisation, supported by improved valuations and macro stability.
“With Budget clarity and strengthening trade linkages enhancing earnings visibility, we remain constructively positioned for the next phase of recovery,” Vora added.
Published on February 19, 2026