Bears have dealt a heavy blow to investors’ portfolios amid the ongoing bloodbath on Dalal Street. Consider this: the combined market capitalisation of companies in the benchmark BSE Sensex tanked nearly Rs 25 lakh crore since September 26, 2024, when the index’s market valuation scaled an all-time high of around Rs 171 lakh crore on the closing basis. On the other hand, the overall market valuation of BSE-listed firms retreated nearly Rs 92 lakh crore during the same period.
Barring two financial majors, 28 companies in the Sensex pack eroded investors’ wealth. With a fall of 35%, Tata Motors emerged as the top loser in the index since September 26, 2024. It was followed by Asian Paints (down 32%), Power Grid Corporation of India (down 30%) and IndusInd Bank (down 28%). On the other hand, Bajaj Finance and Kotak Mahindra Bank gained 12% and 2.3% during September 26, 2024, and February 27, 2025.
Market watchers believe that heavy selling by foreign institutional investors (FIIs), rising US bond yields, steep fall in the rupee, subdued Q3 earnings season and heated valuations weighed market sentiment in recent months.
Brokerage PL Capital expects the markets to remain volatile in the near term but stabilise by December 2025. “The impact of various government initiatives and monsoons (normal monsoons as per APEC Climate Center South Korea) will likely start reflecting in improved consumer demand in Q2CY26,” the brokerage said while slashing Nifty’s 12-month target to 25,689 (27,172 earlier).
Coming to the broader space, Whirlpool of India, Relaxo Footwears and Godrej Properties tumbled 55%, 45% and 41%, respectively, in the BSE BSE Midcap index since September 26, 2024. Delhivery, Star Health and Allied Insurance Company and Thermax also retreated around 40% in the past five years. In the small cap space, Kamdhenu Ventures, Jai Corp and Sterling Wilson Renewable Energy declined 80%, 73% and 60%, respectively, during the same period.
Will the selloff continue in March? Historically, March has favoured the bulls. Over the last 15 years, benchmark indices have delivered positive returns 10 times.
V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, “March is likely to witness recovery in the Indian market backed by better macro news flows and subdued FII selling. Since largecap valuations are fair, and in pockets attractive, FIIs are unlikely to press selling as aggressively during the last few months. Long-term investors can utilise the weakness in the market to slowly accumulate fairly valued quality large-caps and select fairly valued stocks in the broader market, like defence stocks for instance.”
While sharing his views on the risks and challenges for the Indian equity markets in FY26, Kenneth Andrade, CIO Old Bridge Mutual Fund & Founder, Director Old Bridge Capital Management said, “While India’s growth prospects are promising, there are risks. Overvaluation in capital markets presents challenges, as investor expectations have risen to precarious levels. Any underperformance or profit shortfall could lead to volatility, particularly for companies priced for perfection.”
“Additionally, global competition poses a challenge to India’s growth. With China stocks offering a lower valuation along with European stocks being relatively undervalued, global investors have alternatives. In the short term, this may divert some capital flows away from India,” he said.