The stock market has experienced turbulence in 2025, with small-cap stocks seeing significant corrections and widespread concerns about market stability. However, according to veteran market expert Atul Suri, the overarching trend remains bullish. While the market has seen sharp corrections, these dips do not necessarily indicate the end of the bull run. Instead, they offer opportunities for reassessment and strategic repositioning.
Understanding Market Corrections in a Bull Run
Suri highlights that no bull market moves in a straight line. Historical data from previous decades, such as the great U.S. bull market from 1980 to 2000, shows that market crashes and corrections are part of long-term uptrends. Similarly, India’s market cycles from 2003 to 2008 saw moments of extreme volatility, but the overarching trend remained positive. The recent corrections are likely just another phase of this cycle rather than an indication of a prolonged bear market.
Small and Mid-Cap Stocks: Still Room for Growth?
A common market narrative recently has been to shift focus from small and mid-cap stocks to large-cap investments. However, Suri disagrees with the notion that the small and mid-cap story is over. While corrections have been sharp, he believes these stocks still have potential upside. Historically, small and mid-cap stocks tend to recover at a faster pace when markets stabilize, and current ratio analysis suggests there is still room for further growth.
For investors holding small and mid-cap stocks or mutual funds, Suri advises against panic selling. Instead, he suggests that as market conditions improve, these stocks will likely recover faster than their large-cap counterparts.
The Impact of FIIs and the Dollar Index
One of the biggest factors affecting the recent market correction has been the significant selling by Foreign Institutional Investors (FIIs). Suri points out that the surge in the U.S. dollar index from 100 to nearly 110 between September and January directly influenced the massive FII outflows. However, recent weeks have seen signs of a reversal, with the dollar and U.S. bond yields starting to correct. If this trend continues, FII selling is likely to slow down, providing relief to Indian equities.
Suri emphasizes that while domestic institutional investments (DIIs) have helped counterbalance FII selling, much of that money has gone into IPOs and Qualified Institutional Placements (QIPs) rather than fueling secondary market growth. As global liquidity stabilizes, India is well-positioned to attract fresh investments.
The Sectoral Shift: Where to Focus Now?
Investors looking for opportunities amid the volatility should focus on sectors showing resilience. Suri identifies three key sectors that have performed well despite market turmoil:
- Technology: Large IT firms have held up well, benefiting from stable U.S. demand. Given the sector’s high weightage in the index, its stability supports broader market recovery.
- Automobiles: Particularly in the two-wheeler and EV segments, auto stocks have shown strong performance, supported by government policies and increasing consumer demand.
- Pharma and Healthcare: With strong earnings reports and defensive characteristics, pharma stocks have proven to be resilient during the recent downturn.
What’s Next for PSU Stocks?
The Public Sector Undertaking (PSU) stocks were among the biggest winners in the last market cycle, with some experiencing exponential gains. However, in the recent correction, many PSU stocks have lost 25-40% of their value. While some stocks in the defense sector still show strength, Suri believes that several PSU stocks are in structural pain and will take time to recover. He advises investors who bought at peak levels to consider reallocating their portfolios to better-performing sectors.
The Big Picture: Too Late to Sell?
Despite recent downturns, Suri maintains that the broader bull market remains intact. Investors should focus on long-term trends rather than short-term panic. While the market has faced corrections, this phase presents an opportunity for sectoral rotation and repositioning portfolios.
For investors wondering whether to sell, Suri’s message is clear: “The time to panic is over. It’s too late to sell now.” Instead, he suggests focusing on emerging opportunities and waiting for the next leg of the bull market to unfold.
Final Thoughts
Market cycles are inevitable, but long-term investors who stay patient and adjust their strategies accordingly can benefit from these fluctuations. While uncertainty remains, the seeds of the next market rally may already be sown. Keeping an eye on key indicators like the dollar index, U.S. bond yields, and global equity trends will help investors navigate the current landscape and make informed decisions.
As history has shown, bull markets endure corrections, but they always find new legs to move forward. The question for investors now is not whether to exit, but how to position themselves for the next wave of growth.
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