Mumbai: In Midnight’s Children, Salman Rushdie’s acclaimed novel, midnight symbolises the moment when darkness gives way to a new beginning. After nearly 18 painful months, investors are beginning to wonder whether equities may be approaching such a moment.

Markets rarely reward philosophical reflection. Yet bear markets have a peculiar way of forcing it upon investors. A sea of red across portfolio screens tends to do that. But as they snap out of that mood, they are confronted with more practical questions: When will the sell-off end? Should I buy now? Why has the buy-the-dip strategy that worked so reliably since 2020 suddenly stopped working?

Market wisdom holds that sell-offs, especially during wars, often present buying opportunities. The logic is that the market tends to overreact, pricing in some of the direst possible outcomes for the global economy. This time, as the conflict between US-Israel and Iran drags on, investors and analysts have not yet factored in the full extent of global economic damage, but for some aggressive crude price forecasts. Most do not see the war dragging on for long. While the conflict has lasted longer than what the market had expected, with Iran in no mood to give up, investors expect the Street to grow tired and indifferent to the war, much like the ongoing Russia-Ukraine conflict.

So, does that mean this is the right time to buy Indian stocks? For investors accustomed to buying the dip, it is a natural question. After all, the Sensex and Nifty are down 7% this month alone, while the declines in several mid-cap and small-cap stocks are even steeper, extending the correction seen over the past 18 months.

According to an ETIG study, 760 of the top 1,000 NSE-listed stocks by market capitalisation have fallen since September 30, 2024-the phase when the reversal in India’s bull market began. Of the stocks that declined, nearly 70%, or 518, declined over 20% in the period. Further, 33%, or 250, dropped between 40% and 70%.

This sell-off has certainly removed some of the froth seen in these stocks in 2024, but those appear to be only the excesses. Valuations, especially in the mid-cap and small-cap segments, are still far from cheap enough to justify deploying dry powder aggressively.
Moving up the market-cap ladder, valuations of bluechips appear more palatable, according to senior money managers. Even there, however, the jury is still out on whether they qualify as screaming buys. Technically, Indian equities may be oversold in the near term, making a case for nibbling at some of the more beaten-down names in anticipation of a rebound. Should the conflict ease and crude prices retreat, a relief rally of 5-7% cannot be ruled out.

Yet, the case for aggressive buying doesn’t sit well with the market backdrop. For value seekers, the market is anything but cheap. Even after the correction, valuations mostly remain elevated by regional and historical standards. That’s why many see the market less as a screaming buy and more as a sell-on-rise.

Part of the reason is that the current geopolitical tensions may have overshadowed deeper concerns. Before the war dominated narratives, the market had been contending with the potential disruptions from artificial intelligence. For several sectors, particularly in technology and services, the conflict has merely pushed the debate around future earnings visibility to the sidelines rather than being resolved.

With so many moving parts–from crude prices and geopolitics to global liquidity and technological disruption–few investors appear willing to go all in on equities. At the same time, exiting the market after a sharp drop may not be an option either.

For now, the core investment principles remain unchanged: diversification across asset classes and a degree of defensiveness in portfolios. Fixed income does not appear to offer compelling opportunities either, while gold may rebound if the US dollar reverses its winning run.

At this moment, investors are dealing with a kind of market midnight. But unlike Rushdie’s midnight, the one on Dalal Street is marked by mixed signals and limited visibility. It still isn’t a market that would reward bold calls, but it doesn’t warrant selling out either.

The Indian equity market continued to display sharp intraday swings on Tuesday, leaving investors navigating a choppy trading environment.

Market analyst Vinay Rajani from HDFC Securities said that choppiness is still continuing and the market is not able to sustain at higher levels, indicating that the primary trend remains on the downside. However, the recovery seen in the previous session found support near the gap area from April 2025, around the 22,950 level, and bounced back strongly. Rajani noted that Nifty is now encountering resistance at its five-day exponential moving average, currently at 23,560 levels. If the index crosses this level, there is a good chance of further recovery.

Rajani highlighted that some stable movements are visible, with stock-specific and sector-specific bullish moves, supported by positive cues from the Asian markets. He expects a recovery in metals, select PSU stocks, and some power stocks. For traders, he recommends maintaining long positions in Nifty with a stop loss of 23,200, targeting a pullback rally to 23,700–23,800. He also observed that short covering in FII index futures has improved the long-to-short ratio, providing additional support for a rebound.

On stock-specific opportunities, Rajani highlighted resilient performers. Linde India has shown strength and a fresh breakout on the charts. He suggests going long in Linde India around 7,230–7,250, with a stop loss at 7,100, and expects the stock to reach 7,450–7,500. Another pick is MCX, linked to commodities and energy, benefiting from renewed traction in metals like gold and silver, as well as strong performance in oil. Rajani recommends entering MCX around 2,628, with a stop loss at 2,580, and expects a target of 2,720–2,750.

With clear support and resistance levels, traders can navigate the choppy market by focusing on sectoral strength and carefully selected stock opportunities, positioning themselves for potential short-term gains.

Challenger banks have maintained their dominant position in lending to small and medium-sized enterprises (SMEs), but fresh data suggests their rapid ascent may be levelling off as major high street lenders begin to reassert themselves.

According to new analysis from the British Business Bank, challenger banks accounted for 60 per cent of SME lending in 2025, unchanged from the previous year. The figure marks only the second time in more than a decade that their market share has not increased, raising questions about whether the post-financial crisis disruption of the SME lending market has reached a plateau.

The shift in lending dynamics has been one of the defining structural changes in UK banking since the 2008 financial crisis. Traditional lenders including Lloyds Bank, NatWest, Barclays, HSBC and Santander once dominated SME finance, accounting for 61 per cent of lending as recently as 2012. However, regulatory changes, technological innovation and dissatisfaction among smaller businesses created space for a new generation of lenders to emerge.

Challenger banks such as Starling Bank, Allica Bank and Oxbury Bank have since built significant market share by offering more flexible lending models, faster decision-making and digital-first services tailored to SME needs.

Yet the latest data suggests momentum may be stabilising. Louis Taylor, chief executive of the British Business Bank, said it remains unclear whether challenger banks have reached a natural ceiling or whether incumbent lenders are beginning to reclaim ground.

“There is some willingness for the big banks to staunch that market share diminution,” Taylor said, noting that traditional lenders are increasingly targeting profitable SME segments such as deposits, transaction banking and foreign exchange services.

Recent activity supports that view. Lloyds, for example, announced plans to make £9.5 billion available to SMEs this year, while a consortium of major banks has committed £11 billion to support SME exporters. These moves signal a renewed focus on a segment that high street banks were widely criticised for neglecting in the aftermath of the financial crisis.

Despite this, challengers and non-bank lenders continue to dominate the broader SME funding ecosystem. The report found that non-bank lending and challenger banks together now account for 68 per cent of total SME lending, underlining the diversification of funding sources available to businesses.

Alternative finance providers have become particularly influential. Funding Circle remains the largest non-bank lender, holding a “low-to-mid 50 per cent” share of business loans by volume. The growth of such platforms reflects a structural shift towards more fragmented, specialist lending models that cater to different risk profiles and business needs.

Overall lending activity has shown signs of resilience. Gross new SME lending rose by 9 per cent to £68 billion last year, making it the second-highest annual total in more than a decade. Repayments reached £63 billion, resulting in net lending of £4.6 billion — the first positive net figure since 2020.

However, beneath these headline figures, there are signs of underlying weakness. The total value of outstanding loans and overdrafts has fallen by 22 per cent in real terms since 2012, while the use of traditional overdraft facilities has dropped to a record low of £7 billion. Only 9 per cent of SME lending now comes from conventional bank loans.

Instead, businesses are increasingly relying on short-term and flexible forms of finance. Credit cards and overdrafts remain widely used, suggesting many firms are prioritising cashflow stability over long-term investment. Leasing has also grown in popularity, rising from 6 per cent of SMEs in 2012 to 13 per cent last year, particularly for equipment and machinery.

Loan approval rates have improved modestly, rising to 53 per cent in 2025 from 49 per cent the previous year, but they remain well below pre-pandemic levels of 74 per cent in 2019. This has driven greater reliance on intermediaries, with brokers facilitating £33 billion of SME lending last year, a 25 per cent increase on 2024.

The report also highlights persistent structural gaps in the market. Smaller loans, early-stage businesses and companies built around intellectual property continue to struggle to access finance, reflecting risk aversion among lenders and limitations in traditional credit assessment models.

“There are some holes in the system,” Taylor said, pointing to the referral scheme that requires banks to direct rejected applicants to alternative lenders. Because many applications are declined before reaching formal credit committees, businesses often miss out on this pathway altogether.

The broader picture is one of a maturing but still evolving market. Competition has intensified, keeping pricing competitive for low-risk lending, but borrowing costs remain elevated for higher-risk SMEs due to structural constraints and economic uncertainty.

For policymakers and industry leaders, the key question is whether the current balance represents a new equilibrium or simply a pause in an ongoing shift. While challenger banks have transformed access to finance over the past decade, the re-engagement of high street lenders suggests the competitive landscape is entering a new phase, one defined less by disruption and more by consolidation and coexistence.

In that context, the plateau at 60 per cent may not signal a peak, but rather a stabilisation point in a market that is still adjusting to a fundamentally different model of SME finance.

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