In one of the worst stock market routs in recent years, nearly Rs 45 lakh crore has been wiped out from the Indian equity market so far in 2025.
Since the all-time high on September 27, 2024, investor wealth has eroded by a staggering Rs 78 lakh crore.
The decline, driven by weak quarterly earnings, high valuations, and consistent foreign institutional investor (FII) outflows, has intensified recently, with Rs 24 lakh crore lost in just the past week.
On February 14, 2025, the BSE Sensex and NSE Nifty closed in the red for the eighth consecutive session, with the Sensex dropping 199.76 points to 75,939.21 and the Nifty falling 102.15 points to 22,929.25.
The decline has been much steeper in the midcap and smallcap segments.
The market capitalization of BSE-listed firms, which stood at Rs 479 lakh crore on September 27, 2024, fell to Rs 446 lakh crore by January 1, 2025, and further plummeted to Rs 401 lakh crore by the end of February 14.
Bloomberg data (which excludes ETFs and ADRs) shows India’s market cap has dipped below the $4 trillion mark for the first time in over 14 months.
The sell-off began as FIIs shifted focus to other emerging markets like China and Japan but has since been exacerbated by global headwinds and domestic challenges.
For the last couple of months, market sentiment has been dominated by slower economic growth, weak corporate earnings, stretched valuations, and a possible global trade war following US President Donald Trump’s tariff policies.
All these factors have overshadowed optimism around the Union Budget, the RBI’s recent announcement of a repo rate cut, and the softening inflation rate.
On the valuation front, many experts continue to call India’s market the most expensive globally.
Last week, valuation expert Aswath Damodaran noted that India’s market is the most expensive, surpassing even the US and China, with valuations unjustified by growth optimism.
Bajaj Broking Research highlighted concerns over slowing growth, weak earnings, and stretched valuations. “Additionally, global macroeconomic uncertainties and fears of a potential tariff war under a possible second term of US President Donald Trump have weighed on sentiment. Rising US bond yields and a stronger dollar have also contributed to capital outflows, as foreign investors seek safer returns in developed markets,” said Bajaj Broking Research.
The rupee has depreciated nearly 1.5% against the US dollar year-to-date, making it the second-worst-performing Asian currency after the Indonesian Rupiah. This depreciation has further pressured FII investments, leading to nearly Rs 1 lakh crore in outflows so far this year.