A sharp global energy shock and rising stagflation risks triggered a synchronized selloff across global asset classes in March 2026, though Indian markets demonstrated relative resilience against a backdrop of record foreign outflows.

According to PL Asset Management, the asset management arm of PL Capital Group, the month was defined by a systemic correction in equity markets worldwide after crude oil prices spiked 52 per cent following disturbances in the Strait of Hormuz. This surge in energy costs drove global inflation higher, compelling central banks to maintain a higher-for-longer interest rate policy. The resulting de-risking saw major indices tumble, with South Korea’s KOSPI falling over 19 per cent and Japan’s Nikkei declining more than 13 per cent.

PL Asset Management noted that this regime change simultaneously impacted equities, bonds, currencies, and traditional safe-haven assets. As per the firm, in India, the Nifty 50 recorded an 11.3 per cent decline during March. It described the move as a systemic correction rather than a sector-specific rotation, as risk aversion permeated the entire market. While leading sectors like PSU banks, realty, and automobiles faced significant pressure, defensive segments such as pharmaceuticals and FMCG failed to provide their usual cushioning effect.

Siddharth Vora, Head of Quant Investment Strategies and Fund Manager at PL Asset Management, said, “March 2026 marked a liquidity-driven, macro-led correction rather than a fundamental reset, with forced deleveraging amid an energy shock and tightening financial conditions. That said, the current setup increasingly reflects a late-stage correction, not the beginning of a prolonged downturn.”

The Indian market faced a record net outflow of approximately ₹1.22 lakh crore from Foreign Institutional Investors (FIIs). However, this was largely offset by robust Domestic Institutional Investor (DII) inflows totalling ₹1.43 lakh crore. Domestic economic fundamentals remained a pillar of support, with industrial production growing at 5.2 per cent and inflation staying within the Reserve Bank of India’s target range.

Vora further noted that, “Quantitative indicators — breadth, sentiment, and positioning — are in extreme oversold territory, historically associated with market inflection points, and past drawdowns of similar magnitude have delivered strong forward returns. Early signs of stabilisation are emerging across key macro variables — crude momentum is moderating, while the US dollar and bond yields appear to be peaking.”

The firm highlighted that the valuation reset has turned the risk-reward dynamic more favourable. The firm’s “Value-Meter” index dropped to 0.18 in March, its lowest reading since the 2020 pandemic lows. Historically, such levels have preceded significant market recoveries over the medium term.

PL Asset Management suggested that while immediate risks persist, investors should focus on capital protection while gradually building exposure to quality segments where recent dislocations have created entry points.

Published on April 17, 2026