New Delhi/Alive News: Indian stock markets have faced significant volatility in 2026 due to the West Asia conflict, high crude oil prices, rising bond yields and heavy foreign investor outflows. As of October 19, the NSE Nifty 50 had fallen 12.5% since the beginning of the year, while the Nifty 500 was down around 8%.
However, Vikas Khemani, founder of Carnelian Asset Management, believes much of the market’s decline may already be behind investors. He said that although global economic conditions remain uncertain, India’s economic fundamentals continue to be strong.
Khemani pointed to rising corporate profits, healthy automobile sales, strong credit growth and the absence of excessive corporate debt as positive signs. He also noted that India’s GDP growth and tax collections remain strong, while stock market valuations have become more attractive after the recent correction.
According to Khemani, the next few months could remain challenging, but investors with a three-year perspective may find attractive opportunities. He compared the current situation with the market uncertainty during the Russia-Ukraine war in 2022, when high oil prices and supply-chain disruptions also affected global markets.
Carnelian Asset Management, which Khemani established in 2019 after spending 17 years at Edelweiss Securities, has expanded significantly. Its assets under management have grown from around ₹135 crore in 2019-20 to approximately ₹20,550 crore.
The company has now entered the mutual fund business and is preparing to launch its first small-cap fund. Khemani believes small-cap stocks offer opportunities across sectors such as healthcare, manufacturing, consumer businesses and contract development and manufacturing organisations (CDMOs).
He said small-cap companies have delivered strong long-term returns, although investors should recognise that these stocks can be volatile and carry higher risks. He believes India’s long-term economic growth could support a significant expansion in corporate earnings and market capitalisation over the next 10 to 20 years.
Carnelian plans to introduce new mutual fund schemes selectively rather than launch products simply to attract more assets. Over the next two to three years, it may introduce four or five schemes, potentially including flexi-cap, mid-cap or balanced advantage funds. The company is also unlikely to launch sector-specific funds.
Khemani said the firm would prefer to invest in promising sectors through its existing schemes rather than create separate funds around popular themes. His approach, he explained, is focused on delivering value to investors rather than increasing assets under management through frequent new fund launches.
India’s mutual fund industry has expanded rapidly alongside growing retail participation. At the end of September 2026, the country had 57 fund houses, while the industry’s net assets under management stood at ₹82.64 lakh crore.
