A significant global energy shock and increasing risks of stagflation prompted a widespread selloff in asset classes worldwide in March 2026, although Indian markets showed relative resilience amid record foreign outflows, according to PL Asset Management, the asset management division of PL Capital Group.
The month was marked by a systemic correction in global equity markets following a 52 percent surge in crude oil prices due to disruptions in the Strait of Hormuz. This spike in energy costs contributed to rising global inflation, leading central banks to adopt prolonged high-interest rate policies. As a result, major stock indices fell sharply, with South Korea’s KOSPI dropping more than 19 percent and Japan’s Nikkei declining over 13 percent.
PL Asset Management indicated that this change in market dynamics affected equities, bonds, currencies, and traditional safe-haven assets alike. In India, the Nifty 50 experienced an 11.3 percent decline in March, characterized as a systemic correction rather than a sector-specific shift, as risk aversion spread across the entire marketplace. Leading sectors such as PSU banks, real estate, and automobiles faced considerable pressure, while traditionally defensive areas like pharmaceuticals and fast-moving consumer goods (FMCG) failed to provide their usual protective effects.
Siddharth Vora, Head of Quant Investment Strategies and Fund Manager at PL Asset Management, remarked, “March 2026 marked a liquidity-driven, macro-led correction rather than a fundamental reset, featuring forced deleveraging amid an energy shock and tightening financial conditions. Nevertheless, the current environment increasingly resembles a late-stage correction rather than the onset of a prolonged downturn.”
During this period, the Indian market witnessed net Foreign Institutional Investor (FII) outflows amounting to approximately ₹1.22 lakh crore, which were largely offset by strong inflows from Domestic Institutional Investors (DIIs) totalling ₹1.43 lakh crore. The domestic economic fundamentals continued to provide support, with industrial production registering a growth rate of 5.2 percent and inflation remaining within the Reserve Bank of India’s target range.
Vora added that quantitative indicators—breadth, sentiment, and positioning—have reached extreme oversold levels, historically linked to market inflection points. He noted that previous downturns of similar scale have often led to robust returns in subsequent periods. Initial signs of stabilization are emerging in critical macroeconomic indicators, with crude momentum showing signs of moderation and both the US dollar and bond yields appearing to have peaked.
PL Asset Management emphasized that the recent valuation reset has altered the risk-reward profile positively. The firm’s “Value-Meter” index fell to 0.18 in March, marking its lowest reading since the pandemic lows of 2020. Historically, such levels have often preceded significant market recoveries over the medium term.
While acknowledging that immediate risks remain, PL Asset Management advised investors to focus on capital protection while gradually increasing exposure to quality segments where recent market dislocations have generated attractive entry points.
Published on April 17, 2026.
