The market is bleeding… ₹85 lakh crores lost in 5 months, this has never happened in 28 years

The stock market has declined on the last trading day of February as well. 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 during this period investors have lost Rs 85 lakh crore. 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 was down by 31.4%.

But this was before the official launch of the Nifty. The official launch of the Nifty was on 22 April 1996. The figures of the Nifty before this have been calculated later. The worst decline after the launch of the Nifty was seen between July and November 1996. Then after a continuous decline for 5 months, the Nifty had come down by 26%. The decline that is going on now has been 11.68% in the last five months. This is less than the previous declines. Most previous declines have been in double digits.

Decline in wealth

Investors’ wealth has declined drastically since the market was at its peak 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 has fallen 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 declining.

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 going to be more decline? Emkay Global believes that this decline has reduced the valuation of the stocks. Therefore, Nifty below 22,500 looks more attractive. He says that it would be good to invest in financial stocks due to RBI’s soft stance. But use this opportunity to reduce your investment as the valuation of stocks is still not in line with their medium-term growth. The brokerage’s favorite sectors are consumer discretionary, healthcare and telecom.

How will the future move be

Kotak Institutional Equities believes that Nifty will remain in a range this year. According to the brokerage, Nifty is still trading at 90% higher than the MSCI EM index as per the estimated P/E of March 2026. 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 cash position in the second half of FY26 may limit the decline.

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, subdued domestic demand and continued FDI outflows could increase volatility in currency and FPI flows. However, he believes FII outflows peak within 4-9 months. India’s growth is expected to improve in FY26 due to increased capital expenditure and potential tax cuts.

Largest fall ever

While 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 were. The 2008 financial crisis and the COVID-19-induced decline in 2020 were also larger than the current one.

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 revival in consumer demand, market participants will keep an eye on liquidity trends and macroeconomic factors. It remains to be seen if the end of the Nifty downtrend is near.