Despite the Nifty hitting record highs, the pain was hard to ignore in many portfolios, especially mid and small caps. According to Tandon, one of the biggest lessons was that even seasoned professionals are not immune to market euphoria. “Look, the biggest lesson is that even if you really look at even the best money managers, smart strategists, the best investors that people respect, they also get carried away when we see promoters selling, private equity selling, fully knowing that… I always believe in one statement: promoters are the biggest insider, private equity are quasi-promoters, they are the biggest insider.” He questioned the logic of buying when insiders leave. “When they sell, they don’t see value at these particular prices. So how is it that we as a money manager see value in some of these names.”He pointed out that strong inflows often masked underlying risks. “So that’s the important observation and we’re seeing the best names getting caught up in this participation and we’re all talking about the supply being very large, but look at the flow of money that mutual funds are getting.” According to him, participation was not forced. “Everyone says there are other options. It’s not necessarily that you have to participate fully knowing that promoters are leaving, fully knowing that the valuations are expensive, and we all tend to participate.”
Tandon places the responsibility entirely on investors: “Obviously you can’t blame the bankers and the brokers or the promoter; it’s the investor himself who is the first to be blamed because they’re participating.” He added that blaming regulators or intermediaries misses the core of the problem. “We always hear that good IPOs have expensive valuations, regulators should look at it or the bankers should look at it. Why shouldn’t investors do that themselves…, they have to do their own analysis as to whether they want to participate.” Demand, he said, ultimately determines supply. “Since they are in the game, if there is demand, the supply will come at any price. So it is all about the demand game. If there is no demand, the supply will not come.”
Summing up the year he said: “So it’s an important lesson and observation that we saw in 2025. So it was an unforgettable 2025, something similar that you might see in early 2026, also because that cycle has still not reached its peak, people are still participating.”
On the prospects of recovery, Tandon made a selective comment. “So not all. If you say it will all be a bullish move. No.” Instead, he focuses on overlooked areas. “I’m looking at select opportunities, the sector that has the stock or the stock that we’re talking about, that now has a relatively attractive valuation, relatively underutilized. They’re trading in a neglected zone.” Historically, such stocks tend to recover more quickly. “These are the stocks that have the potential to come back and there is a trend that we saw when the rebounds came, these are the names that are coming back.” Excesses, on the other hand, take time to settle down. “Compared to all those names that were in completely admired territory, expensive valuations, extraordinary hype, these are the names where the suffering has only just begun. The great pain is still ongoing.” From a macro perspective, Tandon believes conditions have improved significantly. “So let’s understand it from India’s macro perspective, compared to January 2025 versus January 2026. Our macro picture is much better.” He emphasized the depletion in foreign sales. “We have seen extreme depletion in the selling point, which we have seen from the FII perspective.” According to him, the market is in transition. “So when I look at the cumulative data points in 2025, it was the beginning of that correction and it’s a trough that we’re seeing, it was a peak characteristic in 2025 and 2026 a trough.”
Policy measures could further promote the recovery. “So when the economy comes back, the government is putting in a lot of effort to stimulate consumption, whether it is the GST rationalization or the income tax perspective or some policy changes. I think 2026 should be a better year compared to 2025 and obviously the economy will come back.” He sees opportunities in economically connected sectors. “Anything more related to economic-oriented stocks should do better, whether you talk about NBFC, whether you talk about banks, whether you talk about big infrastructure names.” Even as investments have declined, he remains constructive. “Despite the capex cycle having slowed slightly and overall capex declining, there are certain opportunities that are visible as some of these names have corrected or consolidated for an extended period and this is the name that has potential to recover from current levels.”
However, risks remain acute in segments driven by hype. “All this hype that we’ve seen with the so-called New Age expensive IPOs, this is the pain point where the supply will continue to come on, let’s say, a perpetual basis.” He warned that the exits are far from over. “Because if private equity has to get out, they will do so until their interest is reduced to zero.” As a result, pressure could increase. “So this is where I see a lot of pain because there was an extraordinary amount of money poured into some of these names last year and a lot of people are stuck.”
Tandon urged investors to take a close look at the post-listing performance. “Now if you sit down and analyze the IPO, what is the number of IPOs and how many shares are trading below the IPO price and how many shares are trading significantly below the IPO price, you will get some answers.” Over time, patience can run out. “And as time goes on, one quarter, two quarters, one year, people are going to get impatient because they’re getting negative returns.”
As markets move into 2026, the experience of 2025 is a stark reminder that valuation discipline and emotional control remain the most crucial tools in navigating cycles driven by excess and optimism.
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