Don't Ignore These 4 Investment Opportunities in This Market Correction — Rahul Jain

[00:00:00] Speaker 1: Hi friends, a lot of correction has happened in Indian stock market. For example, when I'm recording this video, Nifty is at around 22,800 level. And all time high that Nifty made was in January, 2026. And it was at around 26,300 level. So almost 13, 14% of correction has happened since January, 2026. And the question right now is that are there opportunities in the market right now to invest or not? And I personally believe that any market, every market will give you opportunities to invest, whether you are a value investor or you are a growth investor. In both cases, you will see ample opportunities in the market. And when market corrects, it actually offers you a lot of opportunities, provided you understand some data backed analysis. So in this video, I'm going to present to you four to five areas, depending on how much of time it will take and walk you through some data points so that you understand where the opportunities lies, where are the risks in the market. And I'll present to you everything in totally unbiased way. If you don't know me, my name is Rahul Jain. I'm a semi-registered research analyst. If you're new to the channel, hit that subscribe button now. And let's start with opportunity number one. Opportunity number one is in large cap stocks, Nifty 100. Allow me two to three minutes of time. I'll present to you some data that will give you totally unbiased view. So what you see on my screen is Nifty 100 price to earning ratio. It is at the time when I'm recording this video on 29th of October, 2026. It's at around 18.6. Okay. Now look at the past history of this. What you will note is that if you look at the five year P range, you will see that the high has been 26.39. And the average has been around 22.12. So from that level, it is dropping to 18.6. If you look at two year range, if you look at one year range, if you look at six month range, if you look at three months range, if you look at one month range, PE is very, very low right now. Nifty 100's PE right now is at 18.6. And a lot of people now will tell you the reasons. Oh, because India's large cap do not have growth, this, that. They will give you narrative because we always find narratives when market is down. You will say N number of reasons that this is why the market is now looking cheap and there could be a trap, et cetera, which I'm not saying that there is never a risk in the market. Of course, it could fall further from here on. But are these valuations good enough for the EPS growth rate, especially if you're a value investor? Well, my answer is absolutely yes. Okay. Let me present to you the EPS data, et cetera. So first of all, have a look at the last five years PE history. So what you note here is the blue line, which is showing you the PE range. Right now we are somewhere here. Okay. 18.71. So if you go back to the last five years history, this is at the lowest point. Okay. 18.6 here. The last lowest you saw was at around 18.96 back in July, 2022. So it's almost gone back to July 22 valuations. Okay. Keep that in mind. Now let me present to you earnings per share. So are the earnings growing up or not? Last five years, again, what you see on my screen is the blue line. And if you go to July 2022 earnings per share, it used to be around 814 for Nifty 100. All right. Top 100 stocks. Now this EPS has gone up from 814 to almost at 1266. So you're getting a valuation of July 2022. Okay. But the earnings have gone up from almost 800 to 1266. And earnings are all time high. Okay. Yes. I do understand the earnings growth rate in large cap has not been great. That I understand. Totally understand it in the last eight quarters or so. I'll also talk about some of the forecasts and predictions. But to me, this looks a very, very good setup for a value investor. Because value investors, they look for value. They look at the valuations while the earnings growth should be decent or reasonable. They're not looking for 25% of growth in earnings per share, right? Now, coming back to what is happening to earnings per share in Nifty 100. Here is Reuters report that came out in August, 2026. And they said that profit growth for Nifty 50 firms, which is the top 50 stocks. It has hit 10 quarter high. Okay. So imagine this earnings growth rate is slowly coming back on track. Okay. And we don't know whether it will continue or not. But if I show you this prediction, which Mutilal Oswal did. Again, I'm not saying Mutilal Oswal's word you have to take. Okay. But this is some idea that they are saying for the Q2, the earnings season right now going on when I'm recording this video, it's likely to be at around 27% broadly. Okay. Now, I do not know whether we're going to hit 15%, 18%, 20%. All of these are focused. But earnings growth will decide where the market will go definitely. But as of now, I don't think Nifty 100 is a bad space to operate in. Why? Because a lot of damage has happened. I've shown you the valuations. And it's not that the earnings growth are like zero or 1% or 2%. I know IT has been dragging earnings a lot because there is a good weightage of companies like Infosys, HCL, Wipro, etc. in Nifty 50. But overall, earnings have not dried down. Okay. That's point number one. Point number two that you need to note is the returns. Okay. So here is a history of Nifty 100 calendar year return. I really want you to understand this pattern. Okay. Because this will allow you to break some of the narratives that are going on in the market. Okay. For example, 2015 and 2016, how much was the returns? Minus 2.41%, 3.60%. Two years of bad performance. And you can find n number of reasons for that. Okay. What happened in 2017? 31% up in one year, single year. Okay. Go back to 2018, 19, 20, 21. The pattern is very simple. 2018, 1.14%, next year, 10%, next year, 14%, and then 25%. So the bad years, right, that are going through Nifty 100 has made up in the subsequent years. That's the pattern that you see. Again, in 2022, it was down, but made up in 2023. Now, since then, if you see 2024, only 11%, 2025, 8.96%, and 2026, when I'm recording this video, we are down by almost 11%. So last two years, virtually zero return in Nifty 100 is what we have seen. Okay. While the average return in the last 12 years, you can see 9.75%. So this is a very good value setup in my view, right? If you want to explore value opportunities. One question that might bother you is that Rahul, then if the earnings are decent, why is that Nifty 100 has not performed? The key reason that I can find right now is the FIs. They have been living in Indian stock market and they're very heavy on large cap stocks. Okay. That is the space they operate in. That is the space. For example, financials. For example, IT. That is where the money has been going out. And you can read this article here that how much of money has gone out from the blue chip stocks. Okay. Now, can they come back or not? I don't know. And a value investor do not care whether FIs will come back or not. You know, whether LTCG will get reduced or not. I've talked about all of those issues, but to round it up, large cap, in my view, present you a lot of opportunities. And if you want to explore direct stocks, there are pockets that you can go and explore, right? If you're a mutual fund investor, here are top 10 mutual funds that you can see on large cap side. Okay. None of these are recommendations. This is the data I'm telling you that you can go and research yourself. Always look for rolling returns here. For example, five-year rolling returns, you can see, right? 10-year rolling returns. You can see three-year rolling returns. You can see, you can look at top three, four companies here and do some more research about their fund manager, their expense ratio, etc. And depending on your current portfolio allocation, you can decide whether you want to include large caps, do not want to include. That choice has to be at portfolio level. I cannot give you a blanket statement that large caps are good and therefore go and invest. Never do that. It really depends on your portfolio. But hopefully this five-minute analysis would have given you what's really happening in the large cap stock. And if you like that, I request you to subscribe to this channel. And in the comments, leave a thank you. It gives a lot of motivation to people like me. With that, let's go to the opportunity number two now. The second opportunity that I personally see is in banking space. Okay. Again, I've created a full video on banking stocks. Okay. You can go and watch that video. Just three weeks back, I talked about it. I still feel there's a lot of value in banking stocks. Okay. Now, let me present you some data as well. If you look at the price to book ratio of Bank Nifty, it's at around 1.6 right now. And again, the same story is playing out here. If you look at the five-year PB ratios, then we are at the bottom. We are at the lowest. Okay. Six months, two years, three months, one month, one year, almost in all time frames, we are at almost low level. Okay. Now, if you see what is happening the last five years, blue line is the price to book ratio. Okay. And this is where we are at around 1.6 here. Okay. Last five years, this is the lowest. And actually it is lowest by a lot because the highest, if you see, was somewhere here, 3.24 used to be the price to book. It's almost at 50% lower valuation than it used to be in July, 2023, right? Now, let me show you the earnings per share of banking as well. And if you see earnings per share, there's no problem here whatsoever. If you look at the blue line, it's been going up, going up, going up. Okay. There's no problem here whatsoever from earnings perspective. Now, again, the same reason is playing out here that FIs have been leaving the banking sector of India. You can see this data here, almost 1100 crores per day of nightmare. This was the data back in June, 2026. And as a result of that banking sector has gone down a lot. And here is the returns, the picture of returns for Nifty bank. If you go back to 2015 to 2020, 26, what you would note, just focus on the Nifty bank column and you would see that outperformances are preceded by the underperformance. So for example, 2015, 16, you see very bad market conditions, minus 9%, 7%, and the following year, 40%, 6%, 18%, minus 2%, 13%, 21%, 12%, 5%, 17%, and now we are at minus 8% so far. Okay. So it could be very well possible that for the next one or two years, it might not move much because FIs need to be positive. They need to come back potentially to the banking sector of India. Will they come back or not? I don't know. And that's the risk investors will need to take. But overall, from a valuation perspective and from where we are in the cycle of Bank Nifty, I think we are at a pretty comfortable stage for people to go and explore this particular space. Okay. Now, if you look at Bank Nifty's top 10 stocks, what you would note is the majority of these companies are very large private banks. HDFC, ICSA, Kodak Bank, Axis Bank, right? This is where majority, like 40, 50% of their stakes are, right? And that is where a lot of selling has happened by FIs, right? Now, when it comes to Bank Nifty or financial space, you have two or three options to go and invest. One is picking the direct stocks. Any banks that you personally go and explore, you will have to look at, for example, metrics like NPAs, right? SMAs, I've talked about SMAs in my last video, NPAs, SMAs, credit loan growth is there or not. A lot of factors that you can go and explore. I can't talk about individual stocks in this video, right? But if you are a mutual fund investor, there are two routes. One is the index route. And then there is an active mutual fund route. Let me quickly take a minute and show you something mind boggling as a difference between these two spaces. Because this is a topic that I don't think many people have talked about on YouTube, that when it comes to banking space, should you look at the index route of investing? Or should you look at the active mutual fund investing? Okay. So the first thing is have a look at the active mutual funds. You see on my screen, these are the list of active mutual funds. And there are five years rolling returns. You can see on my screen, you can also look at the 10 year rolling returns. Okay. Now, why they are different from index funds? So let me take an example of, for example, Invesco India. This has been the highest consistent performer of Bank Nifty active mutual fund. Again, not a recommendation, not a promotion here, simply trying to teach you something very, very interesting. And I went into the fact sheet of this particular mutual fund, like where are they actually investing? Okay. And as of 30th of September, 2026, what I found is that if you look at their portfolio, it's very, very different from an index fund or Bank Nifty. I showed you in Bank Nifty, top 10 stocks were likes of HDFC, Axis Bank, etc. Majority of the money is going into those companies, right? So if you're going through the index route, that is where your money is landing. But when you're going through the active route, that is where your money is landing here. For example, you can see here, ICIC bank takes 12%, Axis 6%, HDFC very low, 5% as compared to the Bank Nifty, right? And you see the type of companies here. It is not just focusing on bank. It is also adding financial services companies. For example, you will have BSC Limited as an exchange. You will see Indian Bank here. You will see Federal Bank here, IndusSyn, L&T Finance, right? Muthud Finance, RBL Bank, right? KFIN Technology, CDSL, Aadhaar Housing Finance. So these active mutual funds are not only focusing on the banking stocks. They're also trying to include financial services. That's one of the key difference. And secondly, the weightages they assign to banks could be very, very different from index. Okay. But again, the choice is yours. Whether you're a passive investor or active investor, that really depends up to you. Here are the index funds as well. I have taken out 10 index funds in front of your screen and I've arranged them in the three years average annual rolling returns basis that you can see. ICICI Pro, Motilal Oswal, Navi, etc. You can see all of these here. You can see their AUM, etc. You can see their expense ratio. You can go and read about these ones as well. But it is ultimately your decision whether you want to stick to the index funds where the weightage is towards the large banks versus the active mutual funds where the weightage is slightly spread out. And the fund manager is making those calls, right? Whether you trust fund manager or not, this is the call you will have to make. But to me overall, banking sector looks very, very attractive. I've presented a lot of data in this particular video, which is Banking Stocks Cheap now. Please go and watch it. I'll try and put the link as well in the description and pinned comment. But otherwise you can go on YouTube and search for Rahul Jain Banking Stocks. You'll find this video coming in the number one. So this is the opportunity number two. And so far, if you're liking this video, request you to keep liking the video. Okay. It really gives us a lot of motivation. With that, let's go to opportunity number three. Now the first two opportunities I talked about there for the value investors. Now, let me move to growth investors. So if you're a growth investor and not worried about short-term volatility, short-term 10% drawdown, et cetera, it doesn't bother you, but you want to leap onto the growth story of some of the pockets of Indian market. Then in that case, the third opportunity that I want to present to you is Nifty Midcap 150. Okay. Again, see what's happening here. The current P/E ratio is at around 26.5. And if you look at the five-year average has been around 30.90. Okay. And the lowest it's gone to 21.59. And that's why I said, if you're a growth investor and do not worry about the volatility, because this 26.5 might come down to 23, 22. If there is further correction in mid caps, that is entirely possible. Okay. Therefore, you need to have some headroom in your mind that if this space corrects a little bit, am I comfortable or not? Right. But if you look at overall valuations, they are conducive as of now. Right. Let me also present to you what's happening in terms of the EPS growth rate for mid caps. And here is a five-year picture. Again, the blue line that you see, the earnings per share are all time high here, as you can see, almost at 779. Okay. And they've been consistently rising. If you see from, for example, if you look at here, November, 2024, it was at around 497. It's almost gone to double here. All right. So it's not that the earnings growth has not been there. Earnings growth have been there. It's just that there could be slightly more volatility in mid caps as compared to large caps. But if you are a growth investor, you should not worry about that. But if you're a value investor, you would look towards the large cap. That's how I see the market right now. Okay. Now, coming back to the sort of returns mid caps have produced. So I've taken a data from 2020 onwards. Last six years data, I couldn't really find a lot of data going back to 2015. But this gives you a fairly good picture that mid caps have been phenomenal in the last six years or so. 24%, 46%, then 2022, not a great year, only 3%. Then came back soaring in 2023, 2024 as well. Now look at the last two years, almost 2025, only 5%. And 2026, they're down by minus 5%. Almost zero returns in the last two years. And if the earnings support mid caps, and therefore I'm saying if, if the earnings continue to support mid cap, I see very, very good positions for the growth investors in the mid cap space. There are 150 stocks. Some of the good companies are now coming up with the earnings and the earnings grow. Some of the companies are phenomenal. I'll do a separate video once this quarterly results are over and bring you, let's say top 10 mid cap companies that have shown very, very good growth rate and future is looking very, very bright. I'll do that type of video as well in the next few coming days. And if you want to get that update, also hit the subscribe button so that you get the notification. But coming back to mid caps, I don't think there is a problem as such. There's not a massive problem here. It could correct more as compared to large caps. Let me put it this way. All right. But definitely it's at a decent valuation right now, if you ask me. Here are top 10 mutual funds that you can see here. For example, last five year basis, Bodilal Oswal mid cap, which is going through a lot of turbulence right now, still standing tall, but three year basis, it has lost its spot. HSBC has taken that spot. And for example, Edelweiss has done really well, 17.32. And 10 year basis, I think there are better mutual funds. Invesco has done well. Nippon has done well. Okay. So you can see this data. Take a screenshot of this and do some analysis at your end. None of these are recommendations. Only look at mid cap space if you want to include growth in your portfolio. Otherwise, don't do that because volatility may persist. We don't know what's going to happen in the midterm elections. We don't know whether FIs could really derail the market even further. Those chances or those risks have not gone out. US-Iran war is still not closed. Those market risks are still there. Therefore, only consider mid cap space if you have that high risk appetite. With that, let's go to opportunity number four now. Now, the fourth opportunity that I'm going to present to you is only for those investors who believe that sometime in the future, let's say one year from here or two year or three year, Indian stock market will see a bull run. Okay. People who are eternal optimist and they believe that we are going to see a next bull run at some point in time, maybe one year, two year, whenever that happens. Okay. For those optimist people, this opportunity is quite interesting that you can explore. For example, I'm talking about momentum space. So Nifty 200 Momentum 30 is an example of a momentum space. Okay. And why I'm saying that it is only suitable for people who believe in bull runs is because you see what has happened in the past here. Okay. So between 2021 and 2022, this index soared by almost 80%. Can you see the green box here? Okay. What happened afterwards? It hit a massive correction phase. Okay. Sideways movement correction down by almost 26%, right? For next two years, it was really, really bad. All right. But after that one year, again, 70%, you see up. And after that, what we are seeing right now is the phase where it is correcting drawdowns and, you know, performance is really, really bad. This goes in a cycle. Okay. In fact, if I show you some returns metrics as well. So have a look at my screen. What do you see is that? 23, 24 massive returns. 25, 26 big blips. This is the kind of risk versus rewards momentum space offers you. It's only for people where they are wanting to see a bull run. And they believe that there is likely to be a bull run. Okay. And the best time to invest in these particular spaces is not when they're soaring. It is when actually they are very, very down, which is the case right now. If you see last two years, no returns virtually. Okay. In fact, there are losses minus 5%, minus 8% is losses. More losses than mid cap and the nifty 50, right? At least nifty 50 last two years was 0%. But here it is even in negatives, right? So again, these are the spaces where the risk and reward opportunities are very, very high. They are very, very volatile. If there is further correction, they will fall even more than mid caps and small caps, potentially. That's how volatile these are. So they are not to include in your portfolio, like 80%, 90%. They're like 5%, 10%. And you sort of experiment with these strategies in your portfolio, because you have to continue to learn as well that how the different strategies are playing out in the market and in which cycle of the market. It's extremely important to understand the cycles. You cannot just really simply go and, you know, not understand the cycle. Understanding of cycles is extremely, extremely important. Now there are various ways to play momentum theme. In particular, you can pick momentum stocks yourself. If you are good at it, you can go and explore Nifty 200, momentum 30. Let me quickly show you what type of index this is. There are more indexes like Nifty 500, momentum 50. That's another one, right? That you can go and explore. For example, here, if you look at this, what's happening is that they are sort of sector agnostic. They will include any stock that is showing momentum. That is their criteria. They are not going to say we are heavy on financials or we are heavy on FMCG, etc. They will not say that. For example, here, capital goods, 24%, financial services, 21%. You can see this allocation here. Companies, you can see top 10 companies here. Loras Lab, MCX, Tata Steel, Shridam Finance, Indalco, all of these companies that have shown momentum. Now the momentum gets derailed when the market actually currents. That's why you see all of a sudden very, very sharp drawdowns in these index funds or the strategies. So therefore the risk reward ratio, as I keep saying, is higher on the both side. Like losses could be very high and the profits could be very, very high at the same time. So these are the strategies that you can go and explore, right? There is another index that you can go and explore. Now, if I talk about the earnings of this particular index and the valuations. Right now, the valuation of Nifty 200 momentum 30 is at around 21.6. From a PE perspective, it is lowest. As I talked about earlier, you can see these are all lowest ones. And if I talk about the earnings per share, it is not a very rosy picture per se. Okay. For example, here, if you see the highest earnings that it delivered was around January 2025, around 1652. The companies into this space, then it dropped massively, but it is now in the path of recovery here. Okay. So it's not that we are sitting at all time high EPS for these stocks, but these stocks do circulate. Please understand. Rebalancing happens almost every six months in the momentum strategies that I presented to you, right? So you can go and explore these momentum strategies. There are active momentum funds as well in the market. Again, I'm not going into details of that. Some of these have been recently launched. I'm sort of tracking their performances as well, whether they are performing in the market, whether they're beating the index strategy or not. Doing some more research and hope to bring you that content also in the next, let's say three to four months. So consider subscribing to this channel so that you can get timely updates about the markets, as well as some data backed analysis, because ultimately I am here to present you some insights. Of course, with my viewpoint, you don't need to take it. I could be horribly wrong. Market has humbled a lot of people in the past and I'm no different, absolutely no different, but hopefully this data analysis will help you. And if it did, please share this video with your friends and family. Hit the subscribe button. I'm going to see you in my next video. Until then, keep rocking.