While domestic institutional investors are pouring in money, foreign investors have just staged the largest-ever monthly exodus. March saw a record $13 billion outflow from Indian equities, underscoring the flight to safety.
Goldman Sachs turned decisively cautious last week, downgrading Indian equities to “marketweight” and slashing its 12-month Nifty target to 25,900 from 29,300. The US investment bank warned that an “energy-shock-led” earnings downgrade cycle is about to unfold, with higher-for-longer oil prices following tensions around the Strait of Hormuz meaningfully worsening India’s macro outlook.
Nomura has also slashed its Nifty target for December 2026 to 24,900 while Bernstein has reduced its Nifty year-end target to 26,000 and flagged the risk of the headline index falling to as low as 19,000 in a worst-case scenario.
Against this backdrop, the world’s most closely watched investor is sitting on unprecedented liquidity. Berkshire Hathaway holds over $350 billion in cash and Treasury bills, with Warren Buffett signaling a lack of compelling opportunities. “We aren’t finding things,” Buffett said in a CNBC interview, referring to limited buying opportunities after US markets slipped into correction territory.
The parallel is not lost on Indian investors: when returns stall and risks rise, does holding cash become a strategy rather than a missed opportunity?
Yet, market participants are far from unanimous on that call.Jimeet Modi, Founder & CEO of SAMCO Group, sees the current phase less as a warning signal and more as a reset. “Such drawdowns naturally create discomfort… But they also serve another purpose: they reset valuations and quietly build the foundation for future opportunities,” he said. “This phase is less about panic and more about perspective.”
There is growing evidence that valuations have indeed cooled.
According to Elara Securities, the Nifty is trading at ~17.3x one-year forward earnings, about 7% below its 10-year average of ~18.6x, placing it in what it calls a historical “bounce zone.” The brokerage notes that similar valuation levels have typically acted as a floor outside extreme disruptions.
However, not everyone is ready to call it a buying opportunity just yet.
Kotak Institutional Equities said that while the correction has improved the reward-risk balance, “this is nowhere such as March 2009 or March 2020… when we had unequivocally recommended buying the market.” It added that valuations remain elevated across much of the consumption and investment space.
For long-term allocators, the strategy is shifting—not toward cash hoarding, but toward disciplined deployment.
Vetri Subramaniam, MD & CEO, UTI AMC, said, “We do not use cash as a tactical tool… Instead of trying to predict short-term market bottoms, our effort is driven towards using market corrections to strengthen the overall portfolio structure.”
Similarly, Dhiraj Relli, MD & CEO of HDFC Securities, advocates a structured approach: “Stabilise… Systematise… Capitalise,” he said, urging investors to maintain buffers, continue systematic investments, and selectively deploy capital during corrections.
Others argue the market has already done much of the heavy lifting.
Aparna Shanker, CIO – Equity at The Wealth Company Mutual Fund, said the past phase has been one of consolidation rather than destruction. “This period has helped correct some of the excess valuations… the market today appears far more balanced… which improves the risk-reward for long-term investors.”
The divergence in views underscores the core dilemma facing investors.
On one hand, macro risks of war-driven oil shocks to currency pressure are rising, earnings expectations are being cut, and foreign capital is exiting. On the other hand, valuations are no longer stretched, and corrections historically have laid the groundwork for future gains.
Whether to mimic Buffett’s cash fortress or deploy systematically into beaten-down equities may ultimately depend on one’s risk appetite and time horizon, but one thing is clear: the zero-return era has reset the board.