HONG KONG - India's flagship equity indices, Sensex and Nifty 50, are near all-time highs, despite underperforming many Asian peers. Yet this exuberance hides another reality: many stocks are ‍trading near their 52-week lows. These beaten-down names ‍may offer investors some attractive year-end bargains.

While Indian equities are up some 9.5% for the year as a whole, this rally is concentrated in a relatively small group ​of firms.

When looking at the shares of 828 Indian companies with more than $500 million in market value, stocks of 109 were within 5% of their 52-week lows and another 139 were only slightly above this level, as of ⁠December 5. In combination, these two categories of flagging stocks are roughly double the number of large Indian stocks trading close to 52-week highs.

It's easy to assume these stocks are cheap for a reason, but, in many cases, ⁠their ‌fundamentals tell a different story. For many of these laggards, earnings growth forecasts are robust, their balance sheets are healthy, and their valuations remain reasonable.

In fact, 14 of the 109 beaten-down stocks clear a high bar, with expected earnings per share growth of more than 10% through 2027, low net debt, and price-to-earnings ratios at or below their forecast ⁠growth, according to the FactSet consensus.

Many are well-known, liquid stocks, including four companies worth over $1 billion: Inox Wind, the telecommunications firm HFCL, Tata Chemicals, and logistics heavyweight Blue Dart . All have strong projected earnings growth, with Blue Dart's forecast coming in the lowest at a still strong 28%.

WHAT SANK THEM?

Their declines are not driven by any sector-specific issue, so why have they lagged?

Mostly because of idiosyncratic factors and investors' narrow focus on the artificial intelligence theme.

Inox Wind started the year looking expensive with a PE ratio of 29.6, and its July share issuance, priced below the market, raised concerns about ⁠dilution for minority shareholders. Valuation was also a concern for Blue ​Dart at the beginning of 2025, as it was trading at a lofty 41 times earnings. Sentiment then worsened sharply after the government issued a demand for additional taxes on one of its subsidiaries in September. Meanwhile, Tata Chemicals suffered due to ‍a drop in the price of soda ash - its key product - and a production outage at its plant in the U.S. Finally, HFCL has disappointed investors, as it started out the year with a high P/E ratio of 36.4 only to see revenue fall 24% in ​the first nine months. On top of this, its owners borrowed money using more than half of their shares as security, raising concerns that lenders might sell those shares if the price fell further.

None of these issues are insurmountable, but in a year when India fell out of favour with many foreign investors, even small concerns had a disproportionately large impact on stock prices.

YEAR-END BARGAIN-HUNTING

Another key issue weighing on many Indian equities this year has been the omnipresence of the artificial intelligence theme, which has dominated investor attention to the detriment of other themes and stocks. Markets often misprice stocks during these dramatic single-theme phases, enabling “weaker” shares to eventually outperform, if the underlying fundamentals are strong.

This recently occurred in India as many solid companies that were heavily sold off in 2024 came to be stellar performers in 2025.

At the end of 2024, 98 stocks were trading at or near their 52-week lows. Of these, 18 were "quality" companies, with strong earnings growth forecasts, solid balance sheets and reasonable growth-adjusted valuations. Fifteen – nine of which had market capitalisations above $5 billion – have gone on to beat the Indian market’s 9.5% return this year through December 22.

Again, these companies had strong earnings forecasts, and their P/E ratios, with the exception of Reliance Industries’ , were at or ⁠below their expected growth rates. In hindsight, therefore, their impressive performance in 2025 was unsurprising.

Of course, this pattern may not play out ‌again this year, especially given India’s still-elevated trade tensions with the U.S. Moreover, good investment options do become harder to come by in markets that have rallied sharply.

But, in reality, even in a strong market, one can often identify high-quality stocks whose prices have been left behind. It’s just a matter of searching hard, and in the right places.

(The views expressed here are those of Manishi Raychaudhuri, the founder and CEO ‌of Emmer Capital Partners Ltd ⁠and the former head of Asia-Pacific Equity Research at BNP Paribas Securities.)​

(Writing by Manishi Raychaudhuri, Editing by Marguerita Choy)