The math is broken. We’ve spent the last three years convinced that gravity is a suggestion rather than a law, especially when it involves the Indian equity markets. But Kalpen Parekh, the CEO of DSP Mutual Fund, just walked into the room and turned off the music.

His thesis is simple, cold, and deeply inconvenient: India’s stock market is currently trading about 18 months ahead of its actual value. We’re effectively paying 2026 prices for 2024 results. It’s like buying a high-end smartphone today, paying the premium for the next two generations of hardware upgrades, and then acting surprised when the camera still only has the same pixels it had yesterday.

This isn’t just a "correction is coming" ghost story. It’s a structural reality check.

For years, the narrative has been bulletproof. India is the last great growth story. The digital plumbing is world-class. The manufacturing shift away from China is a lock. All of that is probably true, but the market has already eaten those gains for breakfast. We’ve baked the next year and a half of "perfect execution" into the current price tags. If a company misses a beat, if a factory opening is delayed, or if the global economy catches a cold, there’s no cushion left. The safety net was sold off months ago to fund more speculation.

Parekh’s point centers on the disconnect between earnings and expectations. Usually, you want to buy a stock because it’s going to make more money tomorrow than it does today. But when you’ve already priced in eighteen months of aggressive, flawless growth, you aren't investing anymore. You’re just hoping someone else is more delusional than you are.

Look at the small and mid-cap sectors. That’s where the real fever is burning. We’re seeing companies with mediocre balance sheets trading at multiples that would make a Silicon Valley venture capitalist blush. People are piling into these stocks because they saw their neighbor make 40% last year. It’s FOMO as a financial strategy. It works until it doesn't.

The friction here is the cost of being right. If you’re a fund manager like Parekh, you’re caught in a vice. You can stay cautious, hold cash, and watch your benchmarks scream past you while your clients scream at you. Or you can join the stampede, knowing the cliff is getting closer with every tick of the clock. It’s a brutal trade-off. Do you look stupid now or look ruined later?

The "India Stack" and the rise of the retail investor have changed the mechanics, sure. We have millions of new accounts opened by people who have never seen a prolonged red screen. They think "buying the dip" is an ancient religious rite that guarantees riches. They haven't learned that sometimes the dip has a basement. And that basement has a sub-floor.

The institutional guys aren't much better. They’re chasing "quality" at prices that defy logic. When you pay 70 or 80 times earnings for a consumer stable company—a business that sells soap and biscuits, not fusion reactors—you’ve lost the plot. You’re betting that the laws of compound interest have been suspended by an act of Parliament. They haven't.

Parekh isn't saying the country is going broke. Far from it. He’s saying we’ve become time travelers who forgot how to get back to the present. We’re living in a future that hasn't been built yet, using valuations as our blueprints. But you can't live in a blueprint.

The problem with being 18 months ahead of fair value is that you eventually have to wait for the world to catch up. That wait is usually boring, painful, or both. It means a period of "time correction" where the market goes nowhere while the actual economy does the hard work of justifying the hype. Or, more violently, it means a price correction that reminds everyone that 2+2 still equals 4, even in a "new era."

We’ve seen this movie before. The names change, the sectors shift, but the ending is remarkably consistent. You can ignore the fundamentals for a long time if the liquidity is high enough and the stories are good enough. But eventually, the bill comes due.

Right now, the Indian market is staring at a massive tab and realize it left its wallet in 2026. It’s a long walk back to find it.

Funny how "long-term investing" only feels like a virtue when the charts are moving up and to the right. When the 18-month gap starts to close, we’ll see how many of these new believers actually have the stomach for the present.

The elevator is currently stuck between floors, and the music is starting to skip. Hope you aren't claustrophobic.