Experts Advise Diversification After Sharp Drop in Indian Stock Markets

Indian equity benchmarks experienced their sharpest monthly decline in September 2026 since March, with the Nifty 50 dropping 6.1% to 22,620.45 and the BSE Sensex falling 5.8% to 72,480.29. This marked the second consecutive monthly loss for both indices, leaving investors uncertain about whether to invest in stocks, gold, or silver.

Despite the downturn, experts suggest that the correction presents a selective buying opportunity in equities. Akshat Garg, Head-Research & Product at Choice Wealth, noted that the Nifty’s fall to around 22,200 has brought valuations down significantly. The Nifty is now trading at a trailing P/E of around 19, below its ten-year average of 23, with a price-to-book ratio of 2.75 against a norm of 3.62. Garg believes quality large-caps, particularly in financials, consumption, and select industrials, now offer an attractive risk-reward profile.

Gold, meanwhile, serves as a hedge against inflation, geopolitical uncertainty, and financial stress. Seema Srivastava, Senior Research Analyst at SMC Global Securities, described gold as the ultimate macroeconomic shield and wealth preservation tool. However, gold can face pressure when interest rates remain elevated or the US dollar strengthens. Silver, with its dual identity as a precious metal and industrial commodity, offers higher volatility and upside potential, especially in sectors like solar energy, electric vehicles, and advanced electronics.

Experts recommend a balanced approach to deploying fresh capital. Srivastava suggests allocating a core portion to equities, maintaining a steady gold allocation for protection, and a smaller tactical allocation to silver for higher risk tolerance. Garg recommends allocating 65-70% to equities in phases, 15% to gold, and the balance to high-quality fixed income.