Stock Market Faces Unprecedented Decline: Investors Lose ₹90 Lakh Crore in Five Months

Rising Foreign Investment in Chinese Market

Stock Market: The Indian stock market has experienced its longest losing streak in nearly three decades. As of February 28, 2025, the Sensex closed at 73,198 points, down by 1,414 points (1.90%), while the Nifty fell by 420 points (1.86%) to end the day at 22,124 points. This marks the fifth consecutive month of decline for the Nifty, a situation not witnessed since 1996.

Five Months of Continuous Market Decline: A Historic Setback

Since October 2024, the Nifty has seen a consistent drop every month, culminating in a 12% decline over the past five months. This is the first time since 1996 that the market has witnessed such prolonged losses. Back in 1996, from July to November, the market suffered consecutive declines, with the Nifty 50 index falling by 26% during that period.

Impact on Investor Wealth: 90 Lakh Crore Rupees Lost

On September 30, 2024, the market capitalization of companies listed on the Bombay Stock Exchange (BSE) stood at 474 lakh crore rupees. However, as of February 28, 2025, that figure had plummeted to 384 lakh crore rupees, resulting in a massive 90 lakh crore rupee loss in investor wealth over these five months.

Key Factors Behind the Ongoing Decline in the Stock Market

• Foreign Investors’ Relentless Selling: Over the past five months (October 2024 to February 2025), foreign investors have withdrawn a staggering 3.11 lakh crore rupees from the Indian market. Weak corporate results in the September and December quarters have contributed to this selling spree. Additionally, the optimism surrounding China’s economic recovery has drawn investors to its market, with Chinese companies’ stocks appearing more affordable compared to Indian counterparts.
• Rising Inflation Remains a Major Concern: Retail inflation, driven by rising food prices, surged to 6.21% in October 2024, the highest level in 14 months. Though food prices have eased, bringing retail inflation down to a five-month low of 4.31% in January 2025, this decrease has not been sufficient to restore investor confidence.
• Slower Economic Growth: India’s economy has shown signs of slowing down. According to estimates by the National Statistical Office (NSO), India’s GDP growth rate for FY 2024-25 is expected to be 6.4%, the lowest in four years. This follows an 8.2% growth rate in FY 2023-24, with the first quarter of FY 2024-25 showing a growth rate of 6.7%, which then dropped to 5.4% in the second quarter, largely due to a weak manufacturing sector performance.
• Concerns Over Donald Trump’s Trade Policies: The threat of reciprocal tariffs, where U.S. President Donald Trump has indicated the possibility of imposing tariffs on countries like India and China in retaliation for their trade policies, has created uncertainty in the global markets. As of March 4, tariffs of up to 25% will be imposed on Canada and Mexico, further exacerbating global trade concerns.

What Should Investors Do Amid This Decline?

Stock market analysts suggests that historical data from academic studies in the U.S. and Europe shows that markets often deliver above-average returns when investors are anxious or worried about the state of the market. they advises investors to stay calm, as market declines often signal that it could be an opportune time for investing. “The best time to invest is when you feel like pulling out of the market,” she explains.

Global Markets’ Performance Amidst the Decline

• U.S. Market: The Dow Jones, which closed at 42,330 points on September 30, 2024, ended February 27, 2025, at 43,240 points, showing a modest rise of 910 points (2.14%) over the five months. However, it still remains 1,774 points below its all-time high of 45,014 points reached on December 4, 2024.
• Chinese Market: The Shanghai Composite, which stood at 3,336 points on September 30, 2024, closed at 3,388 points on February 27, 2025, gaining 52 points (1.55%). Meanwhile, Hong Kong’s Hang Seng Index rose by 2,585 points (12.23%) over the same period, from 21,133 to 23,718 points.
• German and UK Markets: Germany’s DAX index rose from 19,324 points on September 30, 2024, to 22,378 points by February 27, 2025, a significant increase of 3,024 points (15.8%). The UK’s FTSE 100 index also saw a 6.31% rise, climbing from 8,236 points to 8,756 points.

How Long Has the Indian Market Experienced Consecutive Declines?

Since the Nifty 50 index was launched in July 1990, it has seen some of its worst performances during prolonged market downturns. The most significant period of consecutive losses occurred between September 1995 and April 1996, when the Nifty fell for eight consecutive months, dropping more than 31% during that time.

Navigating Through Market Volatility

The Indian stock market is experiencing an exceptionally tough period, but investors should focus on long-term trends rather than short-term fluctuations. While the ongoing losses are disconcerting, they also present opportunities for those who can ride out the volatility. Market corrections are an inevitable part of investing, and with the right strategy, investors can capitalize on these fluctuations for better returns in the future.