Indian Stock Market Continues Decline; Nifty and Sensex Down by 16%. Investors lost ₹40 lakh crore in February. Market volatility persists; experts predict further fluctuations in the next 2-3 months.
Stock Market: The Indian stock market's decline continues. A downturn has been observed for five consecutive months, resulting in significant losses for investors. Investors lost ₹40 lakh crore (4 trillion rupees) in February alone. Market uncertainty has impacted various sectors, and concerns remain about further deterioration in the future.
Significant Decline in Nifty and Sensex
Major stock market indices reached record highs on September 26, 2024, but have experienced a continuous sell-off since then.
Nifty 50 fell from its record high of 26,277 to 22,124 points, representing a 16% decline.
The BSE Sensex closed at 73,198, down from its peak of 85,978, a 15% decline.
Bank Nifty also declined by 11.25%, falling from a high of 54,467 to 48,344.
February Index Performance
February witnessed sharp declines across various indices.
Nifty 50 – 5.5% decline
BSE Sensex – 5.3% decline
Bank Nifty – 2.5% decline
Nifty Midcap 100 – 11.5% decline
Nifty Smallcap 100 – 13.3% decline
Midcap and small-cap indices experienced the most significant declines, resulting in the largest losses for smaller investors.
Sectors with the Largest Declines
Many sectors were severely impacted in February.
IT Sector – 12.4% decline
FMCG Sector – 9.9% decline
PSE Sector – 13% decline
Energy Sector – 11.5% decline
Automobile Sector – 9.7% decline
The IT sector experienced the steepest decline, leading to substantial losses for investors in this sector.
₹40 Lakh Crore Loss for Investors
The ongoing market decline has rapidly reduced the total market capitalization of BSE-listed companies.
Market capitalization stood at ₹424.99 lakh crore on January 31, 2024.
It fell to ₹384.60 lakh crore by February 28, 2024.
This represents a loss of ₹40 lakh crore (4 trillion rupees) in February alone.
Further Decline Possible?
Experts believe the market remains volatile and may take time to stabilize. Sameer Arora, founder of Helios Capital, suggests that volatility could persist for the next 2-3 months.
Arora attributes the pressure on the Indian stock market to factors such as Donald Trump's policies, global uncertainty, and trade wars. However, he anticipates that this volatility may be limited to a few months, after which market improvement might be observed.
Market Outlook and Potential
Puneet Singhania, director of Master Trust Group, notes that the Nifty 50 has broken its crucial support level of 22,500, now posing a significant hurdle.
The next Nifty support level is around 22,041.
A breach of this level could lead to a drop to 21,700.
However, some technical recovery might be seen at the 22,000 level.
But the overall trend will likely remain "sell on rise," meaning selling is likely to occur with any upward movement.
Decline in Stock Market PE Ratio
The continuous market decline has impacted share valuations.
The Sensex's Price-to-Earnings (PE) ratio has fallen to 20.4.
This is the lowest level since May 2020.
During the COVID-19 pandemic, it dropped to 19.5.
Currently, the Sensex PE is 14% below its 10-year average of 23.6.
This decline is the most significant since the 2008 global financial crisis, when the Sensex PE dropped by 34%.
