2 years, zero returns: Is it time for Nifty investors to be fearful or greedy?

The Nifty has delivered near-zero returns over a two-year stretch, but historical data from Edelweiss Mutual Fund shows that across eleven similar episodes since 2001, one-year post-stagnation returns ranged from 5% to 50%, with no instance of prolonged further stagnation. Valuations have compressed to around 17x one-year forward P/E for large caps, roughly 16% below their seven-year average of 18.8x, while MSCI India now trades at a 5% discount to MSCI World versus a historical 17% premium. The earnings downgrade cycle appears to have bottomed, with Nifty 50 FY27 EPS growth estimated at 14.3% and FY28 at 16.5%, and positive earnings surprises rising to about 48% in Q4 FY26 from 32% in the prior quarter.