What a fall! BSE Sensex and Nifty50 have plunged drastically from their lifetime peaks in a matter of a few months. According to a Bloomberg report, the Indian stock market decline has erased over $1 trillion in market value during the previous four months! This has led to a reduction in India’s portion of worldwide market capitalisation.
Based on a 20-day average calculation, India’s share of global equity market value is approaching 3%, showing a significant decrease from its highest point of over 4% recorded in the previous year, the report said.
The Indian stock market is experiencing an unusually prolonged downturn, with a 16% decline from its peak – a correction phase that has lasted significantly longer than typical market adjustments outside major global crises.
Historical data examining 20 previous instances of market corrections exceeding 10% (excluding the global financial crisis and Covid-19) reveals that standard corrections averaged 14% and typically resolved within 70 days, states an ET report.
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The current situation stands apart, with the Nifty 200 experiencing a substantial 16% decrease over 165 days, establishing this as one of the most significant and extended downturns in recent market history.
This correction differs from previous market declines, which were primarily caused by significant global events. The present downturn lacks a major external catalyst, aside from US trade-related tensions. The primary factors appear to be domestic economic challenges, including poor corporate performance, high valuation levels, and continuous Foreign Institutional Investor withdrawals.
What initially appeared as a standard market adjustment has evolved into a persistent decline, affecting both active traders and buy-and-hold investors.
The continuous decline in the Nifty since September, extending across approximately six months, represents an unusual pattern. This gradual but persistent downturn presents a notable contrast to the previous extended bull market phase, which continued for 55 months without experiencing even a 5% reduction.
The BSE100 companies, comprising major and frequently traded firms on the Bombay Stock Exchange, witnessed their revenue growth decelerate to one-third in the previous calendar year versus 2023, whilst their net profit growth accelerated fivefold, demonstrating successful cost management strategies.
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Analysis of BSE100 data by the financial daily, which offers a comprehensive view of India’s equity markets beyond the Sensex, indicated considerable deceleration across industrial, service and consumer sectors.
These organisations recorded a 9% increase in revenues and 32% growth in net profit during 2024, in contrast to 25% sales growth and 7% profit increase in 2023.
“It is largely due to a slowdown in the overall consumption segment as well as oil, gas and steel businesses, where prices essentially remained benign and hurt value growth,” Madan Sabnavis, chief economist, Bank of Baroda was quoted as saying. “If BFSI is excluded, the overall growth will moderate even further. While profit was higher, it was largely due to high base effect, cost control by companies that include cost of production, and marginal salary hikes.”
According to Sabnavis, these organisations are anticipated to deliver improved collective results in the upcoming year.
Sensex outlook: Worst over?
Morgan Stanley maintains its year-end Sensex projection of 105,000 points by December 2025, despite recent global tariff conflicts. Morgan Stanley’s team, headed by Ridham Desai, identifies India as ‘A stock pickers’ market’ and notes that India’s comparative earnings growth is improving, even considering conservative consensus estimates.
A separate analysis from Morgan Stanley suggests that India’s position, with minimal share in global manufacturing exports but substantial presence in services exports, could prove advantageous during international trade disputes.
“Valuations are the most attractive since the Covid pandemic. The market has ignored the RBI’s policy pivot, and a strong budget from the government, among other positive developments since early February. India’s low beta characteristic make it an ideal market for the uncertain macro environment that equities are dealing with. Importantly, our sentiment indicator is in strong buy territory,” Desai’s report says.
Global Market Turmoil: US equities bleed as well
US equity markets have seen a $4 trillion decline in market capitalisation, entering correction territory with a drop exceeding 10% from their December high. The substantial decline stems from economic uncertainties, recession concerns and growing trade disputes, triggering widespread selling that has erased vast amounts of market worth.
The technology sector has experienced the steepest declines. Tesla witnessed a single-day value erosion of $125 billion, whilst Apple and Nvidia each declined approximately 5%. The technology component of the S&P 500 registered a 4.3% fall. Additionally, Delta Air Lines shares tumbled 14% following the airline’s announcement of halved first-quarter profit projections.
