Nifty down 13% in 2026 even as EPS rises

The Nifty 50’s 2026 drawdown is turning into a major talking point across Reddit and market social media, largely because it is happening alongside a steady climb in earnings per share (EPS). The benchmark is down nearly 13% so far in 2026, and the decline has not been limited to a single bad month. Market participants are also pointing out that the weakness extends beyond this year, with the Nifty down nearly 12% since the end of September 2024. If the 2026 decline holds through December, it would be the Nifty’s weakest calendar year since 2011, when it fell 24.6%. Many posts frame the move as a valuation and liquidity story rather than a collapse in headline profits. At the same time, the debate remains unsettled because the market is seeing pockets of earnings improvement and continued domestic participation. The key question being asked is simple: how can earnings rise while prices slide.

What social media is reacting to

A recurring theme is that the correction is not being treated as a “one-off event” driven by a single trigger. Posters point to expensive starting valuations and a meaningful re-pricing of the premium investors were willing to pay for Indian equities. The phrase “foreign investor exodus” shows up frequently in discussions, especially alongside geopolitical shocks and rising oil prices. Another commonly cited factor is concern over the durability of earnings growth, not necessarily the level of earnings today. Several discussions link the drawdown to a slower earnings trajectory since mid-2024, even if EPS did not outright collapse. The rupee being under pressure is also mentioned as a factor affecting overseas appetite. The overall tone is cautious: improving earnings signals are acknowledged, but users note that foreign investors have not decisively returned. The final-quarter setup is being framed as “better valuations with unresolved macro risks.”

The price story: a two-year stretch of pressure

Multiple threads focus on the idea that the market has been under sustained selling pressure for nearly two years, with only a brief rebound in December 2025 and early January 2026. From their late-September 2024 peaks, the Nifty and Sensex are down around 10% and 12%, respectively, based on the shared figures. Specific datapoints are being circulated to anchor the discussion. The Nifty 50 peaked at 26,373 on 5 January 2026 and fell to 23,114 by 20 March 2026, a drawdown of about 14.09%. It also hit a trough of 22,930 on 19 March before a marginal reversal the next day. Another frequently quoted tape point is 8 September, when the Nifty closed at 23,635 and the Sensex at 75,577 after a weak session. The message investors are taking is that this has been a grinding reset rather than a sudden crash.

The earnings story: EPS up, but expectations matter

The “earnings vs price” divergence is at the heart of the debate. One widely shared data point is that Nifty 50 EPS rose 28% from ₹884 to ₹1,131 over the two years until September 2025, with no quarterly decline during that period. The growth profile, however, appears to have slowed after mid-2024, with EPS rising at a slower pace over the next five quarters even as the market corrected. Neelkanth Mishra of Axis Bank is cited in discussions for linking market weakness to the speed of earnings downgrades. Posts highlight that from Q3FY25 there were around 3% cuts, and that downgrade cycle can destabilise valuations even when absolute EPS is still rising. Reddit users also cite NSE data showing Nifty 50 profit after tax growth of only 0.8% in the March 2025 quarter, reinforcing the point that momentum was muted. More recently, broker commentary in the shared context suggests profit growth for Nifty companies accelerated to an average 18% in the June quarter, the strongest in 10 quarters, with more upgrades than downgrades. That mix helps explain why the market conversation has shifted from “earnings collapse” to “earnings path and confidence.”

Valuations: the premium has meaningfully cooled

A big reason the EPS narrative is not translating into higher prices is valuation compression. The Nifty is described as trading at around 20.9 times earnings, below its five-year average of 23.5 times and 10-year average of 23 times. On a forward basis, posts cite compression to about 18.5 times, and elsewhere the Nifty is also described at about 17.5 times one-year forward earnings, below a 15-year average of around 19.6 times. In global comparisons shared online, the forward multiple is contrasted with 31.1 times for the Nasdaq and roughly 21-22 times for the S&P 500, Dow, Japan and Taiwan. This “multiple reset” is often presented as the simplest reconciliation of falling prices alongside rising EPS. The implication is that the market is paying less for each rupee of earnings because risk perception has risen. Users note that this is consistent with periods where liquidity tightens and macro uncertainty rises. The question is whether the compression is now largely done, or whether fresh shocks could extend it.

Midcaps and smallcaps: froth has eased here too

The cooling is not limited to large caps, which comes up often in comments about broader market froth. The Nifty Midcap 150’s P/E is cited as dropping to 31.1 times from 45.8 two years ago. The Nifty Smallcap 250 is described as trading at 31.7 times. For many retail investors, this matters because mid- and small-cap narratives dominated earlier cycles. Sunny Agrawal of SBI Securities is quoted in the shared context saying the underperformance of the benchmark is driven by a slowdown in earnings growth and that this slowdown is leading to capital rotation from large-cap to mid- and small-cap companies, which were doing relatively well in earnings growth. That framing appears frequently in social posts as well, particularly among investors comparing relative returns. The discussion now is less about “everything is expensive” and more about where earnings delivery is still visible. Even so, the fact that midcap and smallcap multiples have fallen is being treated as evidence that risk appetite has tightened across the board. Investors are watching whether leadership shifts back toward large caps if large-cap earnings revive.

A simple dashboard of the debated datapoints

The following figures are among the most repeated reference points in the current discussion.

What changed: liquidity, oil, rupee, and geopolitics

Posts repeatedly list a similar set of headwinds: expensive starting valuations, persistent foreign selling, geopolitical tension in West Asia, and rising oil prices. The correction is also linked to concerns about earnings growth, and to a weaker rupee and global trade uncertainty in the shared context. Some threads use a “liquidity shock” framework, arguing that the price damage reflects liquidity withdrawal with a mild structural overlay. The same context estimates FII outflows of roughly Rs 1.8 to Rs 2 lakh crore between October 2021 and April 2025, which is often cited to explain why domestic flows alone may not be enough to re-rate the market quickly. Axis Capital commentary referenced in the shared text notes a sharp macroeconomic slowdown in FY25, driven by nearly 130 bps of fiscal tightening and a pronounced slowdown in credit growth, culminating in a downgrade cycle. That combination is frequently used to explain why “EPS rising” did not prevent the multiple from falling. Oil remains a key variable because of its impact on inflation, trade balances, and sentiment. The rupee’s pressure is discussed as another factor that can keep foreign investors cautious even when valuations look better.

What brokers are watching into the final quarter

Despite the cautious tone, the shared context includes several constructive broker views that are being recirculated online. Motilal Oswal is cited as believing cheaper valuations, an earnings recovery, resilient domestic flows, and economic growth have improved the market’s risk-reward. Kotak Securities is cited projecting Nifty profits to grow 8.2% in FY26E and accelerate to 17.6% in FY27E, aided by GST rationalisation, rate cuts, benign inflation, and a good monsoon. Sunny Agrawal of SBI Securities expects the benchmark indices to recover, citing more attractive Nifty 50 valuations and expectations of a revival in large-cap earnings. He is also quoted expecting corporate earnings to grow broadly in line with nominal GDP growth of 10-12%, and seeing Nifty 50 earnings growth of around 14% in FY27 and 15% in FY28. Motilal Oswal is additionally cited expecting Nifty earnings growth of 10% in FY26 and 15% in FY27, up from about 5% in FY25. Kotak’s base-case target of 29,120 by December 2026 is also being shared, based on a 20x P/E on FY28E EPS of ₹1,456. Still, the same conversations emphasise that foreign investors have not decisively returned, oil remains a threat, and the rupee is under pressure, keeping the market’s near-term narrative finely balanced.

The takeaway investors are debating

The current debate is less about whether earnings exist and more about how much confidence markets have in the next leg of earnings growth. EPS can rise while the index falls if the valuation multiple compresses faster than earnings expand, and that is exactly what many posts are describing. The valuation premium has cooled meaningfully compared with five-year and ten-year averages, and midcaps and smallcaps have also de-rated. At the same time, there are signs in the shared context of improving earnings momentum, including June-quarter profit growth described as the strongest pace in 10 quarters and an upgrades-over-downgrades tilt. Investors are weighing these positives against unresolved drivers like oil, geopolitics, the rupee, and the return of foreign risk appetite. The debate also reflects a time-horizon split: some focus on the next quarter’s flows, while others focus on FY27 and FY28 earnings growth expectations. For now, the most repeated framing is that the market is trying to reconcile better starting valuations with uncertain macro and liquidity conditions. That tension is likely to remain the core of the social-media narrative into year-end.