Stock market crash: It’s mayhem in Indian stock markets! BSE Sensex and Nifty50 have been in a free fall for several sessions now. The market decline continues unabated, with the Sensex dropping 3,000 points across nine consecutive sessions, severely impacting investor holdings. The situation is particularly severe in smallcap and microcap segments, where retail investors are experiencing significant losses.
Foreign institutional investors have withdrawn Rs 1 lakh crore from Indian markets in 2025, maintaining their cautious approach due to challenging global investment conditions for emerging markets.
Are Indian stock markets in a firm bear grip? Is the Sensex and Nifty bull run over for now?
According to an ET analysis, the Nifty’s current decline marks its longest downward trend since 2019, when it fell 5% over nine sessions between April 30 and May 13. Despite a 6% recovery then, the current scenario appears more concerning. Continuous FII selling pressure dampens recovery prospects, suggesting prolonged market weakness.
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The impact is substantial, with Nifty components declining up to 42% from their highest points, led by Tata Motors’ significant drop. Investors remain anxious about potential further declines as market stability remains elusive.
“Even after this 20% fall that you have seen in smallcaps, we do not yet see very attractive valuations. If at all, you can still call valuations in this space fairly expensive,” Ashi Anand, Founder & CEO, IME Capital was quoted as saying by ET.
Several market experts anticipate the downward trend to persist for some more time.
The third quarter’s earnings results showed modest Nifty growth of 5% year-on-year, failing to alter the market’s cautious sentiment.
“We do not find much value in most parts of the market despite the sharp correction in several sectors and stocks in the past few months. Most sectors and stocks are still trading at rich valuations, with the extent of overvaluation rising in inverse correlation to market capitalization, quality, and risk,” said Sanjeev Prasad of Kotak Institutional Equities.
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He indicated that Indian markets might remain subdued due to high valuations across sectors, possible earnings reductions, and sustained elevated global interest rates.
Motilal Oswal analysts suggest that FY26 corporate earnings projections remain high considering the current macro-micro environment, indicating potential further downward revisions.
The Nifty index recorded single-digit profit after tax growth for three consecutive quarters since June 2020, with the earnings downgrade ratio reaching its peak in 19 quarters.
According to Emkay Global, market pressure is expected to persist this quarter, with recovery anticipated from Q1 FY26 as earnings stabilise and global tensions decrease.
Emkay’s Seshadri Sen says that markets are expected to experience continued volatility in Q4, with potential recurring sharp sell-offs similar to the current situation. The stabilisation is anticipated from the next quarter, driven by three key factors: reduced concerns about Trump tariffs, as their impact is likely to be less severe than anticipated; completion of earnings downgrades, with projected Nifty FY26 EPS growth at approximately 12-13%; and anticipated emergence of indicators showing recovery in discretionary consumption demand.
It’s important to note that Emkay Global maintains its December 2025 Nifty target of 25,000, suggesting the market becomes attractive at 22,500 Nifty.
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“We believe that the markets will pivot to a consumption theme, with capex and industrials taking a back seat. We are overweight on discretionary consumption, healthcare, and telecom, and underweight on financials, materials, and staples,” Sen added.
This period could present an opportunity for long-term investors to exercise patience and implement a gradual buying strategy.
Vinod Nair, Head of Research, Geojit Financial Services says that with the wider market experiencing a 14% correction, further decline seems restricted, backed by robust long-term economic indicators. The country’s GDP growth is expected to rise from 6.4% in FY25 to 7.0% in FY26. The market is likely to emerge from its downward trajectory if profit growth returns to its historical average of 15% in FY26, he said.
