Equity benchmark indices are facing massive corrections, with the NSE Nifty declining over 14 per cent from its lifetime high hit in September last year due to several negative triggers like stretched valuations, foreign fund exodus, disappointing quarterly earnings and rising global trade tensions dragging markets lower.
The BSE benchmark Sensex hit its record peak of 85,978.25 on September 27 last year, and the Nifty also reached a lifetime high of 26,277.35 on the same day.
The Nifty tumbled 3,729.8 points or 14.19 per cent from its all-time high level.
The BSE bellwether index Sensex is down 11,376.13 points or 13.23 per cent from its record peak.
Equity markets came under bear attack from last October onward after smashing many record high levels.
"A correction of this magnitude is usually triggered by a combination of factors.
"Investor sentiment was tempered when a number of large corporations reported lower-than-expected Q3 results.
"Furthermore, the Indian stock market faced a difficult environment due to Trump's tariff threats and worries about India's slowing economic growth, which caused international investors to keep selling.
"The Sensex witnessed a sharp decline of over 13 per cent from its peak, driven by heavy FII outflows, negative technical indicators, weak corporate earnings and global economic concerns," Puneet Singhania, director of Master Trust Group, said.
"Additionally, weak US economic data and inflation risks, fuelled by President Donald Trump's tariffs, added to market uncertainties."
Singhania further said that foreign institutional investors (FIIs) are continuously selling their stakes in the Indian equity market.
The total foreign fund outflows have gone past Rs 1 lakh crore so far in 2025.
"The weakness in the Indian rupee, along with heightened global uncertainties and expensive equity valuations, is fuelling the outflows. FIIs have been moving their money to markets with more appealing valuations, such as China.
"Another factor contributing to this exodus is the US president's trade policies and their effects on emerging markets," he added.
Prashanth Tapse, senior VP (research), Mehta Equities Ltd, said, "FIIs showing no signs of putting brakes on their India exit strategy continue to weigh heavily on markets, with expensive valuations driving investors to curb their equity bets here."
The Sensex has dropped 3,536.89 points or 4.52 per cent so far this year, and the Nifty lost 1,097.25 points or 4.64 per cent.
On FIIs' exodus, Akhil Puri, partner, Financial Advisory, Forvis Mazars in India, said, "Rising US bond yields, a strengthening dollar, weakening Indian rupee, and stretched valuations in Indian equities have diminished the appeal of Indian stocks for foreign investors, triggering significant outflows."
Adding to investor concerns, earnings reports from key Indian sectors, including consumer staples, automobiles, and building materials, have fallen short of expectations, raising doubts about corporate profitability, he added.
"A major risk looming over the market is the potential for a global trade war.
"The US recently announced a 25 per cent tariff increase on steel and aluminium imports and is considering 'reciprocal tariffs' on other goods," Puri noted.
On the road ahead for the domestic equity markets, Singhania said, "A recovery is feasible if corporate profits increase, the global economy stabilises, and the Indian government keeps enacting policies that are beneficial.
"But if global inflation stays high, a recession hits, or FPI outflows persist, more corrections could also happen."
Vinod Nair, Head of Research at Geojit Financial Services, said, "The market's mood remains cautious, with pessimistic sentiments likely to linger until there is a marked improvement in corporate earnings and a conducive environment with easy global liquidity and stabilised currency."
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