Indian stocks have recorded their worst performance in 29 years, causing a $1 trillion loss in wealth. Analysts believe the market downturn may persist.
A screen at the Bombay Stock Exchange displayed India’s Finance Minister Nirmala Sitharaman delivering the budget speech on July 23, 2024.
India’s Nifty 50 index has been the worst-performing global market over the past five months. According to fund managers, investors have adopted a “sell-on-rise” strategy. The financial sector has shown resilience, but Information Technology stocks were significantly impacted in February.
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Since the end of September, Nifty and Sensex have underperformed compared to other global markets. Nifty is eyeing its longest monthly losing streak since 1996. Positioning in the derivatives market suggests that further risks are anticipated.
Since September, both foreign and domestic institutional investors have been making moves in the Indian market, indicating fluctuating confidence.
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In a recent analysis, Biju Samuel of Elara Capital predicted that the Nifty index could drop another 2,500 points.
Despite this bearish outlook for the Indian market, Samuel remains optimistic about the US market. He anticipates that the current bull market in the US will continue, expecting a turnaround following last week’s decline on Wall Street. India’s Nifty 50 index fell for the tenth consecutive session on Wednesday, marking its worst daily losing streak on record.
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The drop is attributed to the escalating global trade conflict, which has introduced uncertainty and weighed heavily on investor sentiment. A man walks past the logo of the National Stock Exchange (NSE) in Mumbai, India, on August 9, 2024. The Nifty 50’s persistent decline reflects broader market concerns impacted by ongoing trade disparities.
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India’s 29-year stock market downturn
Analysts have pointed out that the prolonged trade tensions will likely keep market volatility high in the near term. “Investors are worried about the implications of the trade conflict, not just for the domestic market, but for the global economy as well,” said Bharath Rajeswaran, a market analyst. The implications of this losing streak could be significant for India’s financial market and the larger economy as trade policies and agreements continue to influence market dynamics.
