Investors appear to be waiting for a trigger as Indian equity markets have struggled to deliver meaningful gains over the past two years.
However, this prolonged period of subdued returns may not necessarily point to a deeper market downturn, according to Advait Arora, who believes Dalal Street could be going through another phase of consolidation.
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To put the underperformance in numbers, the NSE Nifty 50 has declined around 3.5% over the past two years, while the BSE Sensex has shed a little over 4% during the same period.
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However, Arora, in a post on X, has drawn attention to the disconnect between stock market returns and the broader growth in the Indian economy and corporate earnings. He pointed out that while benchmark indices have remained largely flat for more than two years, nominal GDP has grown by 9-10%, while recent Nifty earnings have expanded 15-16%. Earnings growth among small- and mid-cap companies has been even higher, he noted.
"In the last 2+ years markets have stayed flat while nominal GDP rose 9 to 10% & recent Nifty earnings grew 15 to 16%. Small and midcap earnings were even higher," Arora wrote.
In the last 2+ years 🇮🇳 markets have stayed flat while nominal GDP rose 9 to 10% & recent Nifty earnings grew 15 to 16%. Small and midcap earnings were even higher. In recent times FII selling has come down & luckily the rupee has steadied. This same kind of stretch has come 6-7 times since year 2000. Right now it looks more a pause in time than a big price drop & mutual funds have still done better than the market through it. India is unique in many ways and it keeps bringing companies from every sector and size to the market & a large part of the economy is still not listed. Sensex has compounded 13 to 14% a year for 32 years since liberalisation & doubled roughly every 6 years. In stretches like this prices stay sideways while the underline growth keeps moving positively. How many of these boring periods will people show patience through before the next doubling starts to look normal again?
— Advait Arora (@WealthEnrich) November 2, 2026
He also highlighted some recent changes in the broader market environment, including a moderation in foreign institutional investor (FII) selling and relative stability in the rupee.
Institutional flows kicked off November on a mixed note. The Foreign Institutional Investors (FIIs) net bought shares worth Rs 3,117.99 crore, while Domestic Institutional Investors (DIIs) offloaded shares worth Rs 406.61 crore, on November 1.
The picture was considerably scarier in October, with FIIs net offloading shares worth approximately Rs 45,162 crore.
Arora believes the current phase is not unusual when viewed against the market's longer-term history. According to him, similar periods of sideways movement have occurred six to seven times since 2000.
"This same kind of stretch has come 6-7 times since the year 2000. Right now it looks more like a pause in time than a big price drop," he said, adding that mutual funds have continued to perform better than the broader market through this period.
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