MUMBAI: Ace investor Vijay Kedia expects Indian markets to hold above their 52-week bottom made in April last year, even as the latest correction rattles retail and wealthy investors.
"I have a gut feeling that markets would not break the low we saw last April," said the investor when Mint asked how deep the present correction could run.
The Nifty has corrected 10.4% from its record high of 26,373.2 on 5 January this year to 23,639.15 on Thursday. A stock or index enters corrective territory when it falls between 10% and 20% from its high.
The benchmark index had hit a low of 21,743.65 on 7 April last year, six months after touching a record 26,277.35 on 27 September 2024. The 17% drawdown came after an intense spell of foreign institutional selling amid fears that global tariffs proposed by US President Donald Trump would impact emerging markets like India.
Asked how he had positioned himself in the current market, Kedia said, "I am sitting like an eagle, waiting and watching to make the right move."
Following the downturn, Kedia has set his sights on the midcap and smallcap space, where he believes "value can be found" by those having an investment horizon of at least three years.
“Many mid- and small-cap stocks are illiquid, so on small volumes they fall a lot more (than large caps), but they also can rise a lot more on small volumes after a bottom has been made.”
The Nifty Midcap 150 has outperformed the benchmark, having fallen 8.2% from a record high of 22,650.05 on 7 January through 20,790.9 on Thursday. However, the Nifty Smallcap 250 has corrected 15.4% from its record high of 18,077.35 on 17 July last year to 15,266.45 on Thursday.
Kedia said, though there was panic among investors, his advice to them would be to wait for an opportunity to buy quality stocks not impacted by fallout from the West Asia conflict and to stay invested in them for three to five years.
"Money is never made in euphoric times, it's made invariably when there is panic and when quality is there for the picking. Be cool and level-headed before making a decision to invest in the current market cycle. Avoid sectors that have been badly hit by the present fallout from the war," he said.
Some of the stocks in which Kedia held 1% or more of equity capital as of December 2025 end included Vaibhav Global, Atul Auto, Elecon Engineering, Siyaram Silk Mills, and Patel Engineering, among others.
Apart from the listed space, Kedia has trained his sights on the unlisted space in deep tech companies.
The present situation in the Gulf, he said, had added fuel to the fire, as the market had already seen selling by foreign portfolio investors since October 2024.
Panic prevails
Other market veterans also expect the correction to continue until the West Asia conflict is resolved.
Independent market analyst Ambareesh Baliga underscored there was panic among HNIs currently, while Jyoti Jaipuria, founder of portfolio management services firm Valentis Advisors, who is also a mid- and small-cap stock specialist, said wealthy investors were not deploying incremental capital as of now.
"It's possible we could visit the lows of last April," said Baliga, adding that HNIs he had spoken to, who were confident until a week ago, were now in panic mode.
Jaipuria told Mint that the average drawdown during such crises was typically 8-10% for benchmarks and that he was deploying cash to buy quality stocks at attractive valuations post the current fall.
What derivatives tell us
Nifty options contract for 30 March shows some short covering in the 24,000 strike put option, and the next big support for the current month stood at 23,000 strike as of now.
The open interest, or outstanding positions, stood at 76,673 contracts at the 24,000 put strike and at 87,583 at the 23,000 strike expiring on 30 March by Thursday closing.
These positions reflect what bulls consider strong supports, per S.K. Joshi, consultant, Khambatta Securities.
Aside from the 17% decline between 27 September 2024 and 7 April 2025, the last time the market fell 18% over eight months was between 19 October 2021, when it hit a high of 18604.45, and a low of 15183.4 on 17 June 2022, amid high valuations and low earnings growth.