FIIs have turned buyers for the first time after a long period. However, the recent 2-day rally in small-cap stocks has mainly been driven by retail investors. FII buying is an important signal that the market has likely already formed a bottom. I do not expect any major downside from here.
As I have been saying, the downside in our market is limited, while the upside potential is very high. FIIs are likely to turn net positive soon, and our market will start outperforming. It is important to understand that we do not need aggressive FII buying— even a slightly positive FII flow is enough to lift the market, because DIIs and retail investors are strong enough to support the rally.
I have also said since the beginning of the bear phase that in the next bull cycle, old multibagger stocks will underperform, while new-age and emerging sector stocks will outperform. In this bull run, you will see fresh leaders from emerging sectors. If your portfolio is not recovering quickly during this phase, it is time to re-evaluate your stock selection.
I have repeatedly mentioned that gold and silver are likely to underperform in 2026, while equities will outperform. However, many investors have entered gold and silver due to FOMO.
Remember, the biggest returns in the stock market come when valuations are attractive. Once valuations become expensive, it becomes much harder to generate profits. The next one year could be a major wealth-creation phase for investors focused on potential multibagger stocks.
For April 2026, I expect the market to remain largely sideways. The next major rally is likely to begin from May 2026 onwards, especially as companies start announcing their Q4 results.
As I mentioned earlier, the Nifty Smallcap 250 index has formed a bottom around the 15,000 level, and this is a good phase to accumulate quality stocks. Our Nifty 50 prediction of 23,000 (+/- 500) has already played out, and the market has reversed from those levels. I was expecting a further correction towards 21,600 for more attractive valuations, but strong DII support prevented that.
One important thing to understand: nobody in the world can predict the exact market bottom. Nifty levels are influenced by FII and DII flows than by technical charts alone.
The recent market correction has already priced in most war-related negative news. Even if new developments occur, I do not expect a major impact on the market. Markets typically discount future events in advance and do not react repeatedly to the same news.
Going forward, the market will react more to Q4 earnings. Over the past two months, I have consistently advised focusing on stocks showing high relative strength during the crash—and we have already seen strong moves in such stocks. I have shared several examples from sectors like data centers, power transmission, pharma, and auto ancillaries.
I am planning to release a new YouTube video covering emerging sectors and high-potential stocks.