STOCK MARKET BIG PICTURE IN APRIL 2026

STOCK MARKET BIG PICTURE IN APRIL 2026

How did the Indian stock markets perform in April 2026, as the US and Iran oscillated between war and peace; and which were the best and worst sectors.

What about generic indices in April 2026. After the carnage of March, April saw a sharp recovery; with smaller stocks recovering sharper. For April; Nifty 50 gained (7.49%), Nifty Mid-Cap 100 (13.56%), Nifty Small Cap 100 (18.45%), and Nifty Micro Cap (21.57%)

All sectoral indices ended in the green for April 2026. Star performing sectors for the month were Realty (21.87%), Metals (15.27%), NBFCs (14.27%), Chemicals (14.21%), Consumer Durables (12.87%), FMCG (12.17%), and REITs (10.11%).

All the strategy indices also closed in the positive for April 2026. Strategies that showed stellar performance were Momentum Quality, High Beta, Alpha 50, Quality 50 etc. The strategies that lagged in April were Low Volatility, Growth, and Equal Weight.

What about Thematic Indices in April 2026? Star themes for April in terms of returns were; SME Emerge, Defence, Capital Markets, Energy, Infrastructure, and Logistics. Themes that put up a tepid show were; Services, Digital, ESG, CPSEs, and Mobility.

Like in March 2026, PSU banks were subdued in terms of returns but has been the top performer in terms of 5-year CAGR returns. IT sector lagged in April, giving returns of just 1.23%, while Healthcare also lagged with just 5.05%, amidst a rapid bull wave.

HOW SECTORAL INDICES FARED ON RETURNS IN LAST 1 YEAR?

The table captures the returns on 20 key sectors with ranking on 1-year returns.

Data Source: NSE Indices

There are interesting takeaways from sectoral returns analysis

The last one year has been a year of mixed performance with 12 out of 20 key sectors giving positive returns and 8 sectors giving negative returns. While Metals, Capital Markets, and PSU Banks were the best performers; IT, Realty and FMCG lagged in FY26.

What about a longer-term view. If we take a 3-year or 5-year view; the best performers on CAGR returns were Capital Markets, Defence, and PSU Banks. On the downside, IT, Private Banks, and Cement lagged with single-digit returns over last 5-years.

Defence and Capital Markets have been more a case of structural re-rerating. On the flip side, while IT struggled on AI risks, private banks have lagged more due to valuation concerns compared to the Indian PSU banks.

Let us now take a look at the risk aspect of sectoral indices.

HOW SECTORAL INDICES FARED ON RISK IN LAST 1 YEAR?

Returns are one side of the coin. Risk is the other side of the coin for investors.

Data Source: NSE Indices

The above table is ranked on 1-year volatility (standard deviation of returns) starting with the most volatile sectors to the least volatile sectors.

What about volatility / return correlation? Realty and IT have not justified the higher volatility in prices; but capital markets, defence, PSU Banks and metals managed to justify the higher volatility risk in last 1 year.

Over the last one year, just 13 out 20 sectors were aggressive sectors with Beta ≥ 1. Pharma and Healthcare have generated best defensive risk-adjusted returns.

R-Squared shows how much sector returns are explained by Nifty movements. Lower the R-Squared, better for diversification. The diversification ideas in the last 1 year were Defence, IT, and Pharma. Defence offered diversification with outperformance.

Let us finally turn to how valuations of various sectors stack up?

SECTORAL INDICES AND THE VALUATION PLAY IN LAST 1 YEAR

Here, we look at sectoral valuations ranked on P/E ratios as of April 2026.

Data Source: NSE Indices

Here are key takeaways from the valuation parameters.

The top sectors by returns (Capital Markets and Defence) are also expensively priced by P/E. For now, that is justified by the pace of growth. Valuations of FMCG and Consumer Durables have sobered substantially in the last 1 year.

PSU banks and Oil & Gas are still trading at single-digit P/E ratios. IT and Private Bank P/E ratios are sharply lower than their 10-year averages. Metals may find it tougher to justify 22X valuations; especially with dividend yield coming down to 1.5%.

The sharp sell-off in IT has made this sector very attractive in terms of dividend yield at a whopping 3.66%. However, such generous dividend payouts has raised questions of how surplus cash will be deployed, leading to tapering of the P/E valuations of IT.

The one sector that checked multiple boxes in April 2026 was PSU Banks. Apart from high returns across time frames and low P/E ratio, these PSU banks also offer low correlation with the Nifty. This makes PSU banks a solid source of returns and diversification!