Berra’s paradox, intended or not, suggests what a lot of us generally understand to be true: A surge in popularity for something is often the first sign of its decline.

It’s also a useful yardstick with which to measure a key market risk. Definitions might vary, but an asset bubble generally occurs when its price rises far in excess of what it can actually return to its owner.

Meme stocks, for instance, took off in early 2021 and powered the value of money-losing companies such as GameStop and Bed Bath & Beyond (which ultimately went bankrupt) to dizzying heights. Bitcoin prices, which are effectively based on the dollars committed to a particular form of blockchain technology, are worth more than 110,000 greenbacks.

Labubu, a plush collectible toy made by China-based Pop Mart International Group—which carries a $60 billion valuation on the Hong Kong stock market—is the newest, but by no means unique, addition to the “this is a bubble" debate.

Sold in so-called blind boxes, the toys have exploded in popularity over the past year and change hands at multiples of 100 or more to their retail value.

Scarcity, mystery, social-media zeitgeist, and an active secondary market have all combined to fuel the global Labubu phenomenon. It’s also made Pop Mart’s founder, Wang Ning, one of China’s youngest billionaires.

It won’t last, of course, because it never does. From Tulip Mania in the 17th century to the explosion of South Sea Company shares in the 18th century, asset bubbles have a long and sordid history.

Collectibles markets have also come and gone, as we’ve seen with pet rocks, Cabbage Patch Kids, and Beanie Babies all commanding short periods of obsession before fading into insignificance.

Some, however, continue to surprise. A rare-edition basketball card signed by legends Kobe Bryant and Michael Jordan sold for $12.9 million earlier this week. A baseball card featuring Babe Ruth sold for $24.1 million last summer.

It’s hard to argue that a small piece of cardstock paper, measuring 2.5 by 3.5 inches, can return $13 million, to say nothing of $24 million, worth of value to its owner. But price and value aren’t always connected, and, as Oscar Wilde once said, a cynic is a person who knows everything about the former, and nothing about the latter. Parsing the difference is crucial.

Big Tech stocks carry massive valuations, while newer entrants to the artificial-intelligence boom have attracted billions in new investment capital. That has led, inevitably, to comparisons of the tech market bubble that formed over the final years of the last century before spectacularly bursting in the current one.

Or, as Yogi Berra once noted: “it’s déjà vu all over again."

But valuing companies with scant revenue and little opportunity to monetize their business plans, as was the case in the early 2000s, is quite different from what we’re seeing today. The companies at the heart of the AI story are spending billions, but most of it is coming from the cash they’re already generating. And they are growing profits at the same time.

Speculative bubbles aren’t always an omen of something more sinister.

As Hardika Singh, economic strategist at Fundstart, said in a recent client note, the plush doll craze can certainly be a “window into consumer behavior, which is a big part of what economists and analysts study."

But reading too much into a current fad “goes to show how unwilling investors are to admit that this still very much remains a bull market, albeit at times a stupid one," she added.

So, we’re still in a real bull market, but corners of it are forming bubbles. That’s a paradox Yogi would appreciate.

Write to Martin Baccardax at martin.baccardax@barrons.com

A Mint analysis of more than 4,000 BSE-listed firms shows that India’s markets, even after recent corrections, look closer to premium than cheap. The debate is no longer whether stocks are undervalued, but whether India’s growth trajectory justifies the premium investors continue to pay.

Bargains or premiums?

To grasp this shift, look back to the pandemic lows. On 23 March 2020, when the Sensex hit its Covid trough, fear reigned. Nearly two-thirds of companies traded below 10x earnings. Those bargains made up about 16% of the market’s capitalization, while close to half of all equity wealth sat in stocks priced at 10-25x earnings. 

At the premium end, very few companies commanded hefty multiples: Barely 5% of firms traded above 60x earnings, together making up just 9% of total market value. The rest clustered in the 40-60x range, representing about 13% of the market. For investors with conviction, bargains abounded—though fear kept many from acting.

Also read | Endgame: Crores wiped out as investors flee gaming stocks—did they see it coming?

By 26 September 2024, when the Sensex touched record highs, the composition had flipped. A staggering 26% stocks were trading above 60x earnings, accounting for 36% of total market cap. Nearly 30% of the scrips were priced between 25x and 60x, commanding 38% of market wealth. By contrast, companies valued below 10x earnings had shrunk to a meagre 7% of total capitalization.

The rally didn’t last. By March 2025, the headline index had fallen 15% from its peak, as foreign outflows, US tariff moves, and geopolitical tensions hit sentiment. Even so, bargains didn’t return. The market has since recovered 10% from that low, but still trades more than 5% below its peak. Today, 22% of companies continue to trade above 60x earnings, accounting for 28% of market wealth, while 26% sit in the 25-60x range. Deep discounts remain rare.

This persistence raises an uncomfortable question: if valuations remain structurally high, how to navigate this?

Divided debate

“India has created seven new industries in the past eight years, many of which rewarded investors handsomely," said Manish Bhandari, founder & CEO of Vallum Capital. “The real challenge is not whether markets are cheap or expensive overall, but identifying the right pockets of value—and that’s where true wealth gets built."

Others argue that corrections in recent months have already begun stabilizing valuations. “With the recent market consolidation and broad-based correction across sectors, valuations are recalibrating," said Ranju Rajan, head of managed accounts at Axis Securities. “This setup is constructive for bottom-up stock picking, especially in sectors where fundamentals remain intact and near-term headwinds are priced in."

Also read |  Retail investors' verdict: Tariffs can’t trump a good bet

A third school of thought views the “undervaluation" narrative less in absolute terms and more as a relative opportunity. 

Narinder Wadhwa, MD & CEO of SKI Capital, said, “Indian valuations today—Nifty 50 at 22x earnings and nearly a quarter of companies above 60x—are clearly elevated versus Covid lows and Asian peers. Yet India’s structural growth story—world-leading GDP growth, strong institutions, favourable demographics, and policy reforms—justifies a premium. The claim of being undervalued is less about ratios and more about the runway of growth and institutional stability."

India’s premium problem

Compared with peers, India looks expensive. The Nifty 50 trades at 22x earnings, above most of Asia. South Korea’s Kospi and Taiwan’s Taiex sit in the mid-to-high teens, while China’s CSI 300 trades even lower. Indonesia is at 15.9x and Brazil at just 8.7x. By global standards, India looks more like a developed market than an emerging one.

“On the face of it, Indian markets don’t look cheap," said Akshat Garg, AVP at Choice Wealth. “More than a hundred companies trade above 50x earnings, and the Nifty itself is at 20-22x, compared with 12-16x for most Asian peers. By traditional yardsticks, that sounds expensive."

But Garg argued that India’s premium is not simply about sentiment. 

“The domestic economy is growing at 6–7%, with expectations of double-digit corporate earnings in coming years. A young population, rising middle class, stronger bank balance sheets, and reforms like GST, IBC and PLI are expanding the formal economy in ways few peers can match. So while valuations look stretched on paper, the undervaluation narrative comes from the belief that India’s growth premium is still underappreciated. If earnings deliver, today’s multiples may not be expensive—they may simply be the ticket to the next decade of India’s growth story," Garg added.

Mayank Mundhra, VP at Abans Financial Services, echoed that view: “Indian stocks, while trading at higher valuations compared to pre-Covid levels and Asian peers, are still seen as undervalued from a forward-looking perspective. Some softness in earnings is visible due to global headwinds, but confidence in the long-term growth story remains strong."

Capital shift

What sustains this elevated structure is not just growth expectations but also the shifting balance of capital flows. So far in calendar year 2025, foreign portfolio investors (FPIs) have sold equities worth ₹1.13 trillion. Domestic institutions (DIIs), however, have absorbed the selling, buying a massive ₹4.74 trillion. The gap is stark in monthly flows. In August alone, FIIs sold ₹15,547 crore, while DIIs bought ₹66,183 crore.

This is in sharp contrast to September 2024, when the Sensex hit record highs and both FPIs and DIIs were net buyers— ₹49,792 crore and ₹31,860 crore respectively. Since then, domestic inflows have become the market’s stabilizing force, propping up valuations despite foreign exits.

 

“Despite continued foreign outflows, strong domestic inflows have kept markets resilient," said Mundhra.

Axis’s Rajan also sees opportunity in the current setup: “The consolidation around Nifty 25,000 has potential to surprise positively in the long term—once earnings gain momentum and global flows stabilize. For disciplined investors, this is a window to reposition portfolios towards selective structural winners with strong balance sheets."

Two stock recommendations by MarketSmith India:

Buy: Paradeep Phosphates Ltd (current price: ₹225)

Why it’s recommended: Outstanding operational performance in FY25, diverse product portfolio & market reach, strategic infrastructure & logistics, and top-tier ESG credentials

Key metrics: P/E: 22.90, 52-week high: ₹234.39, volume: ₹213.02 crore

Technical analysis: Trending above all its key moving averages with a positive bias

Risk factors: Raw material price volatility and FX exposure, policy & market dependency in a concentrated domestic market, evolving agricultural trends

Buy: ₹225

Target price: ₹255 in two to three months

Stop loss: ₹210

Buy: Waaree Energies Ltd (current price: ₹3,265)

Why it’s recommended: Rapid capacity expansion and backwards integration, robust order book and execution capability

Key metrics: P/E: 39.31; 52-week high: ₹3,743; volume: ₹4,695.11 crore

Technical analysis: downward-sloping trendline breakout

Risk factors: Export trade challenges and US probe risk, intense price competition and supply overhang

Buy at: ₹3,200-3,280

Target price: ₹3,800 in two to three months

Stop loss: ₹3,050

Nifty 50: How the benchmark index performed on 26 August

On Tuesday, Indian equities witnessed a sharp correction, with benchmark indices ending more than 1% lower amid a broad-based sell-off. The Nifty 50 declined 255.7 points, or 1.02%, to close at 24,712.05, while the Sensex shed 849.37 points, or 1.04%, to settle at 80,786.54. The intraday weakness was significant, as the Nifty 50, after opening with a downward gap at 24,899.50, failed to recover and consistently traded in negative territory, and closed near the day’s low.

The market's negative sentiment was primarily driven by geopolitical and macroeconomic headwinds, including the looming imposition of additional US tariffs on Indian exports and persistent selling by foreign institutional investors (FIIs). On the sectoral front, Nifty Metal, Realty, and Pharma led the decline. The advance-decline ratio was heavily skewed in favour of bears. However, the FMCG sector demonstrated notable resilience, closing with modest gains.

From a technical perspective, the Nifty 50 faced selling pressure after failing to sustain above 24,850 as well as its 21-DMA, indicating weakness in near-term momentum. The relative strength index (RSI) continues to trend lower and currently reads at 46, suggesting a loss of bullish momentum without yet entering oversold territory. Meanwhile, the MACD remains in positive territory but continues to trade below both its signal line and the zero axis.

According to O'Neil’s methodology of market direction, market status has been downgraded to an “Uptrend Under Pressure" as the Nifty breached its “50-DMA" and the "distribution day count" is at three.

The index failed to sustain above 24,850 and is currently trading marginally above its 100-DMA. The overall bias has turned negative, with the next support levels placed at 24,650 and subsequently 24,450. On the upside, immediate resistance is seen at 24,900, followed by the psychological 25,000 level. A sustained move above these resistances would be essential to signal renewed strength and open scope for a meaningful recovery.

How did the Nifty Bank perform yesterday?

On Tuesday, the Nifty Bank opened on a weak note and traded in negative territory throughout the session. The index formed a bearish candle on the daily chart, characterized by a lower-high and lower-low structure. It opened at 54,999.05, touched an intraday high of 55,068.90, and slipped to a low of 54,396.10 before settling at 54,450.45. The persistent selling pressure reflected broad weakness in banking stocks. Notably, all the constituents of the Nifty Bank ended in the red, adding to the bearish sentiment.

The momentum indicator, RSI, has weakened further, slipping toward 33, while the MACD continues to trend below its central line with a sustained negative crossover. According to O’Neil’s methodology of market direction, Bank Nifty is currently classified as being in an “Uptrend Under Pressure".

In such an environment, investors should adopt a cautious stance—remaining selective, focusing on fundamentally strong and technically resilient stocks, and exercising disciplined risk management, while deploying capital only in high-conviction opportunities.

From a technical standpoint, the index breached its 100-DMA on Friday and has since continued to trade below it, signalling sustained selling pressure. Today’s price action further intensified the downside bias, raising the risk of a deeper correction. If weakness persists, the Nifty Bank could retest its 200-DMA, which lies nearly 3% below current levels. On the flip side, a meaningful recovery and confirmation of bullish momentum would require the index to reclaim and sustain above its 50-DMA near 56,250.

MarketSmith India is a stock research platform and advisory service focused on the Indian stock market. Trade name: William O'Neil India Pvt. Ltd. (Sebi-registered Research Analyst Registration No.: INH000015543)

Investments in securities are subject to market risks. Read all the related documents carefully before investing. Registration granted by Sebi and certification from NISM in no way guarantees performance of the intermediary or provide any assurance of returns to investors.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

Such investments can provide valuable insights and potential for outperformance, but they carry risks such as market timing, volatility, and misalignment with personal goals. Investors should critically evaluate guru strategies, stay well-informed, and diversify rather than blindly copying their portfolios.

Even seasoned investors like Dolly Khanna aren't immune to market swings. A handful of her portfolio stocks are down year-to-date, but that doesn't necessarily mean the investment thesis has gone wrong.

Markets can be irrational at times, driven by sentimental shifts or sector-specific worries.

Who is Dolly Khanna?

Dolly Khanna is a Chennai-based investor who is known for picking lesser-known midcap and smallcap stocks. She has beeninvesting in stocks since 1996.

Her portfolio, which is managed by her husband, Rajiv Khanna, is usually inclined towards more conventional stocks in manufacturing, textile, chemical, and sugar stocks.

Which Dolly Khanna Stocks Have Fallen Most in 2025?

#1 Prakash Pipes

Prakash Pipes specialises in the manufacturing of PVC pipes and fittings. The company’s product range includes agri pipes, column pipes, plumbing pipes, casing pipes, SWR Pipes, garden pipes, and related fittings. These products are widely used in irrigation, drainage, housing, and sanitation.

Dolly Khanna hiked her stake in Prakash Pipes during the quarter ending March 2025, but she again sold a stake in the quarter ending June 2025. Her holding in Prakash Pipes now stands at 3.2%, which is down from 4.1% in the March 2025 quarter.

 

Since 1 January 2025, the stock has lost 34%, dropping from levels of ₹503.85 to ₹334.10.

Prakash Pipes stock touched its 52-week high of ₹667.9 on 5 September 2024 and its 52-week low of ₹299.55 on 18 August 2025.

On the financial front, Prakash Pipes reported subdued numbers for Q1 FY26. Net sales saw a marginal dip to ₹203.4 crore in Q1 FY26 from ₹204.2 crore in the corresponding period of the previous year. Net profit saw a sharp 59% decline to ₹10.3 crore.

During the quarter, the PVC Pipes division achieved sales volume of 14,115 MT against 12,704 MT in the corresponding quarter of the last financial year. PVC prices remained subdued, which affected profitability during the quarter.

Moving ahead, the management said that good monsoon this year augurs well for the industry. Further, with the government's thrust on infrastructure spending, the company expects good demand from housing, infrastructure, and irrigation sectors in the ensuing quarters.

Meanwhile, the flexible packaging division is driving growth by diversifying its product range and offering customised solutions to its customers. The division is continuing to focus on exports to maintain its sales volume and margins in the ensuing quarters.

The company's focus remains on expanding its plastic pipes and fittings business, improving product quality, and expanding capacity to meet increasing demand from the infrastructure and construction sectors.

 

#2 Rajshree Sugars & Chemicals

Rajshree Sugars & Chemicals is a sugar company in South India, but also operates in the distillery, power, and biotechnology sectors.

The company’s distillery uses molasses (a by-product of sugar production) to produce potable alcohol and ethanol for fuel blending.

Rajshree Sugars & Chemicals generates sustainable green power by using bagasse (fibre residue from sugarcane processing) in cogeneration plants. Surplus power is exported to the regional electricity grid.

Dolly Khanna’s stake in Rajshree Sugars & Chemicals is currently 1.3% as of the end of the June 2025 quarter. Her holding in Rajshree Sugars & Chemicals is up 0.2% from the March 2025 quarter.

 

Since 1 January 2025, the stock has lost 34%, dropping from levels of ₹58.62 to ₹39.47. The stock touched its 52-week high of ₹80.02 on 30 August 2024 and its 52-week low of ₹32.7 on 4 March 2025.

The company reported net sales of ₹140.9 crore for Q1 FY26, as against ₹240.1 crore in the corresponding period of last year. The company reported losses of ₹14.1 crore for Q1 FY26, as against a net profit of ₹5.9 crore in the corresponding period of last year.

Moving forward, the company is enhancing operational efficiency and sustainability in its existing sugarcane-based integrated complexes.

The company will also innovate in distillery products, including potable alcohol and ethanol for fuel blending, aligning with growing market demand for biofuels.

Overall, Rajshree Sugars aims to maintain its integrated business model while adapting to market trends, improving efficiency, and fulfilling sustainability goals to secure long-term growth and competitiveness.

However, recovery in domestic sugar demand and sugar prices will be key to the company’s performance going forward.

#3 GHCL

The company is primarily known for being the largest manufacturer of soda ash at a single location in India, with a major manufacturing plant at Sutrapada in Gujarat.

GHCL produces soda ash in two grades—light and dense—which are essential raw materials for detergents, glass, ceramics industries, solar glass, and lithium-ion batteries.

The company also manufactures sodium bicarbonate, widely used in bakery, pharmaceutical, fire extinguisher manufacturing, and cleaning agents.

Dolly Khanna’s stake in GHCL is currently 1.1% as at the end of the June 2025 quarter. Her holding in GHCL is up 0.1% from the March 2025 quarter. There was no stake in the company prior to the March 2025 quarter.

 

Since 1 January 2025 the stock has lost 21%, dropping from levels of ₹739.1 to ₹584. GHCL stock touched its 52-week high of ₹779.3 on 31 January 2025 and its 52-week low of ₹529.2 on 7 April 2025.

On the financial front, GHCL reported flattish numbers for Q1 FY26. Net sales at the company were ₹795.9 crore, as against ₹830.5 crore in the corresponding period of last year.

The net profit for Q1F2Y6 was ₹144.1 crore, a drop of 4%.

Global uncertainty and an abundant supply of soda ash due to weak demand impacted the company's realisations in the quarter.

The Indian industry was also impacted with increased imports. This adversely impacted the revenues of the company for the quarter.

However, for GHCL better operating leverage combined with operational excellence has helped to maintain healthy EBITDA margins in Q1 FY26.

Moving forward, the minimum import price (MIP) for soda ash, which was initially imposed until 30 June 2025, has now been extended until 31 December 2025. This indicates the government's continued focus on protecting the domestic industry, which should help GHCL.

The company’s proposed bromine plant construction is progressing rapidly. The same is to be commissioned by H2 FY26. GHCL’s vacuum salt project is also set to come alongside the bromine plant, which should help cater to large FMCG customers. The new salt field in Kutch, going forward, will be the cornerstone for salt production at GHCL. Along with captive consumption for soda ash, this will be used to produce bromine.

Apart from this, the company said that relentless focus on cost optimisation and best-in-class productivity will help solidify its leadership position.

However, the key point for financial performance would remain demand and price recovery in soda ash.

Conclusion

Even renowned investment experts can make mistakes or have strategies that do not work for everyone. Markets are unpredictable, and no one can accurately forecast all outcomes.

Investment gurus can provide useful insights and education, but treat their advice as one factor among many.

It’s essential to maintain your own critical thinking, tailor strategies to your needs, and be aware of the potential risks of following investment advice.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com

When it is included, Max is likely to have more weightage in the index than Apollo Hospitals Enterprise Ltd, going by its current free-float market capitalization of ₹90,000 crore versus ₹79,000 crore for the latter.

There’s also Max’s suspension of cashless treatment across its hospitals for Bajaj Allianz policyholders. This has to do with the tussle between hospitals and general insurance companies over alleged overbilling of customers.

The cashless facility suspension may have dampened the positive sentiment around Max’s Nifty inclusion announcement, possibly explaining the stock’s initial muted reaction. Passively managed funds that replicate Nifty constituents will have to buy shares worth $400 million at the time of the rebalancing, as per Nuvama’s estimates, though it’s still some time away.

Irrespective of the Nifty inclusion, actively managed funds will continue to evaluate Max’s relative attractiveness versus Apollo Hospitals. Max’s shares have risen 43% in the past year, massively beating Apollo’s 14% gains, indicating that the stock has been on the radar of savvy investors for some time now.

PL Capital and Motilal Oswal Financial Services have valued Max’s hospital business at 36x and 35x, based on EV/Ebitda for FY27. Both have assigned a lower multiple of 30x EV/Ebitda for Apollo’s hospital business. The comparison is only for the hospital business and excludes the diagnostic segment, which is smaller. Plus, Apollo has a pharmacy and 24/7 digital businesses.

Bed capacity

So, why is Max’s hospital business getting an almost 20% valuation premium over Apollo’s? To begin with, Max’s bed capacity was 5,200 at June-end versus the much higher 9,463 beds of Apollo. But Max’s occupancy rate in the June quarter (Q1 of FY26) was higher at 76% compared with 65% of Apollo.

The Ebitda margin for both is similar at 25%. But Max’s reported Arpob (average revenue per occupied bed) was ₹78,000 versus ₹63,000 for Apollo, as per Motilal Oswal. There could be some difference in calculation regarding netting off fees paid to service doctors.

 

Max’s return on capital employed (ROCE), excluding capital work in progress and new units in Q1, was 32% versus 28% for Apollo (excluding capital work in progress). The gap appeared more glaring considering that Apollo has been in existence for 42 years versus Max’s 24 years, which must have given the former a capital cost advantage in terms of lower real estate cost.

Apollo plans to add 50% capacity over the next five years, while Max aims to double capacity, albeit on a smaller base. Thus, Max is likely to deliver a higher growth rate than Apollo even beyond FY27. This also suggests the FY27 valuations mentioned earlier capture Max’s higher growth until then adequately.

Max plans to use the ‘agreement to lease’ route for almost 30% of its capacity expansion, which is about 1,500 beds. This could potentially widen its ROCE advantage over Apollo. This route involves getting a customized hospital made by a third party and taking it on a long-term lease.

The two broking firms seem justified in assigning higher valuation multiples to Max, given the superior ROCE and higher future growth potential. But as the target prices of both firms show just about 10% upside for Max, the stock’s near-term upside may well be capped.