What began as a bit of correction has escalated into considerable carnage as Indian markets have fallen steadily in recent months, causing investor jitters and prohibiting them from making new movements in the market.
The once-high-flying equities, which were regularly achieving new heights and setting new milestones for most of 2024, capturing worldwide attention with their flawless rally, are now under extreme stress, plummeting with no bottom in sight. Since October 2024, the Nifty 50 has concluded each month in the negative, and it is expected to do so again this month as offshore investors continue to sell at an unprecedented pace.Â
This would also be the second-worst monthly loss run since the Nifty 50 index was launched in July 1990. According to historical statistics, the Nifty 50’s worst monthly performance occurred in 1995, when the benchmark index saw its longest losing streak of eight months, from September 1995 to April 1996, falling by more than 31%. This drop was followed by another five months of continuous decreases between July and November 1996, reducing the index’s market value by 26%. Furthermore, the index had a four-month losing skid from October 1991 to January 1992, May to August 1998, and June to September 2001.
FPIs sold above ₹3.10 lakh crore:
The extended fall in Indian markets has been exacerbated by continuous selling by overseas investors, who have been net sellers since October and are slowly unloading their holdings at an accelerated rate. In just five months (October 2024-February 2025), they withdrew ₹3.11 lakh crore from Indian markets, leaving local investors to bear the whole selling pressure. The shift in mood was fueled by dismal earnings reports from Indian businesses in the September and December quarters, which failed to justify the premium values these stocks had maintained for a long time.
Furthermore, investors are concerned about Donald Trump’s trade plans, which are projected to raise costs and influence the global economy. The US Federal Reserve has also taken note of Trump’s trade policies, prompting it to stop the rate-cutting cycle in January.
Domestically, the Indian economy has stagnated in recent months, as substantial price increases and weak income growth have caused urban consumers to cut down on spending. Furthermore, government spending fell in FY24, forcing the RBI to decrease its GDP forecast for the current fiscal year and retain a cautious stance for FY26. According to reports, GDP might fall to a four-year low in FY25.
Nifty 50 and Sensex are dropped up to 14% from their peaks:
Since their heights, both indexes have been on a downturn, suffering considerable losses, with the Nifty 50 dropping 3730 points from its top of 26,277, or 14.2%, in late September. Similarly, the Sensex has fallen 11,376 or 13.23 points from its top of 85,978. Twenty-seven Nifty 50 members are trading 20-44% below their one-year highs. Tata Motors is leading the fall, trading 44% below its previous high of ₹1,179 per share. Similarly, two-wheeler manufacturers such as Bajaj Auto and Hero MotoCorp sell at up to 38% discounts.
Prepare for greater volatility:
The Indian equities environment, which successfully survived global anxiety following the COVID-19 epidemic, is experiencing a substantial shift in market attitude. After a long period of robust growth, the market is losing its attraction, with investors becoming more concerned about future possibilities due to domestic and global worries. In response to a weaker local and international environment, brokerage companies are lowering their target multiples for the Nifty 50. The most recent change comes from InCred Equities, which reduced its blended Nifty 50 objective to 22,850 (factoring in Bloomberg consensus EPS decreases for Nifty 50) by March 2026F, representing a 2% increase from current prices.
