The Indian stock market witnessed a significant downturn, erasing over Rs 27 lakh crore in investor wealth over the last eight trading sessions. The continuous decline has been attributed to foreign investor selling, global economic concerns, and high stock valuations.
According to data from the Bombay Stock Exchange (BSE), the total market capitalization stood at Rs 428,03,611.66 crore on February 5, 2025. However, after eight consecutive sessions of decline, the market cap has now dropped to Rs 400,99,281.11 crore, reflecting a loss exceeding ₹27 lakh crore. During this period, the BSE Sensex has plummeted nearly 3 per cent, mirroring broader market corrections.
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Key factors behind the market sell-off
Market analysts point to consistent foreign investor outflows, global uncertainties, and concerns over United States President Donald Trump’s economic policies as contributing factors to the downturn. Additionally, investor sentiment has been dampened by concerns over high stock valuations and reduced liquidity due to policy tapering.
Despite the recent Union Budget 2025 announcement, the stock market failed to show a positive response, as investors remained wary of corporate earnings slowdown, monetary policy shifts, and global trade uncertainties.
Expert analysis on market trends
Vinod Nair, Head of Research at Geojit Financial Services, highlighted the fragile investor sentiment, stating: “The market concluded the week on a sombre note, with a sell-on-rally sentiment. Realty fared the worst, as investors turned cautious with diminishing chances of interest rate cuts and weak industry numbers. The broader market remains under pressure, but the resilience of large-cap stocks is a positive sign. The Indian market has successfully navigated similar challenges in the past, from taper tantrums to geopolitical concerns.”
Nair further elaborated on the ongoing market correction, explaining: “The current correction is driven by a combination of factors, including tapering, an earnings slowdown, elevated valuations, and trade uncertainties. We believe the market is now in the final phase of consolidation. With the broad market having corrected by 14 per cent, the downside appears limited, supported by strong long-term economic fundamentals.”
Market experts suggest that investors should remain cautious while closely monitoring global trends and economic developments. While short-term volatility is expected, strong long-term fundamentals may provide stability in the months ahead.
