Mumbai: Today, on February 28, the Sensex fell 1414 points (1.90%) and closed at 73,198. The Nifty also fell 420 points (1.86%) and closed at 22,124.
Since October 2024, Nifty has closed in the red every month. It has fallen 12% in 5 months. This is the first time since 1996 that the market has declined for five consecutive months.
Earlier in 1996, the market had witnessed a decline for 5 consecutive months from July to November. During these 5 months, the Nifty 50 index fell by 26%.
How much has the wealth of investors decreased in the last 5 months?
The market cap of companies listed on the Bombay Stock Exchange (BSE) was Rs 474 lakh crore on 30 September 2024, which fell to Rs 384 lakh crore on 28 February. That is, the wealth of investors has decreased by Rs 90 lakh crore in 5 months.
What are the reasons for the continuous decline in the stock market?
- Continuous selling by foreign investors: In just five months (October 2024-February 2025), foreign investors withdrew Rs 3.11 lakh crore from the Indian market. Investors have sold this due to weak results of companies in the September and December quarters. Apart from this, expectations of improvement in the Chinese economy attracted investors. Investors are finding the shares of Chinese companies cheaper than the shares of Indian companies.
- Inflation is still a major cause of concern: Retail inflation rose to 6.21% in October 2024 due to the rising cost of food items. This was the highest level of inflation in 14 months. However, due to the cheapness of food items, retail inflation came down to a 5-month low of 4.31% in January 2025. This reduction is not enough to restore the confidence of investors.
- Slow pace of economy growth: The Indian economy has slowed down in recent months. According to the National Statistical Office (NSO), India’s growth rate in the financial year 2024-25 is estimated to be 6.4%, which is the lowest level in 4 years. In the last financial year 2023-24, the GDP growth rate was 8.2%. At the same time, it was 6.7% in the first quarter of the financial year 2024-25. In the second quarter, this number fell to 5.4%. Growth remained slow due to the poor performance of the manufacturing sector.
- Investors worried about Donald Trump’s trade policies: There is uncertainty in the market due to US President Donald Trump’s threat to impose reciprocal tariffs on other countries including India. Trump had said recently, ‘We will impose reciprocal tariffs. Be it any country – India or China, we will charge as much as they charge us. We want equality in trade. 25% tariff on Canada and Mexico is going to be implemented from March 4.
What should investors do in this fall?
Devina Mehra, MD of asset management firm First Global, says – Academic studies conducted from America to Europe show that whenever people are nervous or worried about investing in the market, the market has given more than average returns. That is, whenever you think that you should sell the shares, stop SIP and exit the market, that time is the best time to invest in the market.
Let us understand this with two examples:
- On 21 January 2008, the Sensex fell by nearly 1400 points in a single day. By the end of 2008, the Sensex fell from 20,465 points to 9716 points. In September 2010, the Sensex again crossed the 20,000 mark.
- In the year 2020, due to the Corona epidemic, the Sensex fell from 42,273 points to 28,288 points in a single week. Recovery was seen in it from April 2020 and the Sensex reached the level of 47,751 by the end of the year.
That is, whenever the market has fallen, it has also shown rapid recovery. In such a situation, investors who are already invested should continue with their investment. On the other hand, those who want to make a new investment can invest little by little.
Has the global market also declined?
- The US market Dow Jones was at the level of 42,330 on 30 September 2024. It closed at the level of 43,240 on 27 February 2025. That is, it has risen by 910 points (2.14%) in 5 months. However, Dow Jones made an all-time high of 45,014 on 4 December 2024. That is, the market is 1774 points below the high.
- China’s market Shanghai Composite was at the level of 3336 on 30 September 2024. It closed at the level of 3388 on 27 February 2025. That is, it has risen by 52 points (1.55%) in 5 months. On the other hand, Hong Kong’s Hang Seng Index was at 21,133 on 30 September. It closed at the level of 23718 on 27 February. That is, it has risen by 2585 points (12.23%).
- Germany’s stock market DAX was at the level of 19324 on 30 September 2024. On 27 February 2025, it closed at the level of 22378. That is, it has risen by 3024 points (15.8%) in 5 months. At the same time, the FTSE 100 index was at the level of 8,236 on 30 September. On 27 February, it closed at the level of 8,756. That is, it has risen by 520 points (6.31%).
For how many months in history has the Indian market fallen continuously?
The Nifty 50 index was launched in July 1990. Data shows that Nifty 50 recorded its worst monthly performance in 1995. Then Nifty fell for eight consecutive months from September 1995 to April 1996. During this period, a decline of more than 31% was recorded.
