Share Market Crash: Market bleeding... ₹85 lakh crores wiped out in 5 months, this has never happened in 28 years

Share Market Crash : There has been a huge decline in the domestic stock market. The stock market has declined for the fifth consecutive month. This is the longest period of decline since 1996. The market had reached its peak at the end of September but since then it has declined drastically. Due to this decline, investors have suffered a loss of Rs 85 lakh crore.

The stock market has declined on the last trading day of February. The stock market has declined for the fifth consecutive month. This is the first time since its formal launch in 1996 that the Nifty has declined for five consecutive months. The market has been in a downtrend since the end of September and investors have lost Rs 85 lakh crore during this period. If we look at history, the Nifty has declined for four or more months only six times. The longest decline was seen between September 1994 and April 1995. Then the Nifty fell for eight consecutive months and fell by 31.4%.

But this was before the official launch of Nifty. Nifty was officially launched on 22 April 1996. The figures of Nifty before this were calculated later. The worst fall after the launch of Nifty was seen between July and November 1996. Then after a continuous fall for 5 months, Nifty fell by 26%. The current fall has been 11.68% in the last five months. This is less than the previous falls. Most of the earlier falls have been in double digits.

Decline in Wealth

Investors' wealth has declined significantly since the market peaked in September. The total market cap of BSE listed companies has fallen by Rs 85 lakh crore to Rs 393 lakh crore. Nifty has fallen 14% from its highest level, while Nifty Next 50 is down by about 25%. Smallcap and microcap stocks have fallen even more. These stocks have fallen by 24-25%. This has put these stocks in a bear market. Bear market means when the market is continuously falling.

Nifty is down 14% from its highest level and other market indices have also come down. Traders and analysts are worried about the future. The biggest question is whether this is the end of the decline, or is there more decline to come? Emkay Global believes that this decline has reduced the valuation of the stocks. Therefore, Nifty below 22,500 looks more attractive. It says that due to the soft stance of RBI, it would be good to invest in financial stocks. But use this opportunity to reduce your investment as the valuation of the stocks is still not in line with their medium term growth. The brokerage's favorite sectors are consumer discretionary, healthcare and telecom.

How will be the next step

Kotak Institutional Equities believes that the Nifty will remain range bound this year. According to the brokerage, the Nifty is still trading at 90% higher than the MSCI EM index based on the March 2026 projected P/E. Earnings growth estimates may come down. No significant uptrend is expected in the short term. However, good growth prospects in the medium term and better liquidity position in the second half of FY26 may limit the downside.

Foreign institutional investors (FIIs) have withdrawn more than $20 billion from Indian stocks and bonds since October 2024. This is one of the largest withdrawals in recent history. Prabhudas Lilladher warns that global uncertainty, sluggish domestic demand and continued FDI outflows could increase volatility in currency and FPI flows. However, he believes that FII outflows reach their peak within 4-9 months. India's growth rate is expected to improve in FY26 due to increased capital expenditure and potential tax cuts.

The biggest drop ever

Although the current decline is the longest monthly decline, it is less severe than previous declines. The 31.4% decline in 1994-95 and the 26% decline in 1996 show how bad previous bear markets have been. The financial crisis of 2008 and the decline caused by COVID-19 in 2020 were also larger than the current decline.

Despite continued withdrawals by foreign investors and short-term risks, historical patterns suggest that FII selling tends to taper off in a few quarters. With better fiscal policies, infrastructure spending and a possible recovery in consumer demand, market participants will keep an eye on liquidity trends and macroeconomic factors. It remains to be seen whether the end of the Nifty downtrend is near?

PC:NBT