The Indian stock market has been grappling with a prolonged bearish phase, with the Nifty 50 and Sensex indexes underperforming other global markets since September 2024. The Nifty is on the verge of its longest monthly losing streak since 1996, and the market has erased a staggering $1 trillion in wealth, marking the worst performance in nearly three decades. Fund managers continue to view the Indian market as a “sell-on rise” opportunity, reflecting the prevailing bearish sentiment.
The positioning in the derivatives market further indicates additional risk, suggesting that investors are bracing for more volatility in the near future. While financial stocks have shown some resilience amidst the downturn, information technology stocks have been particularly hard hit in February. The sector has been one of the major contributors to the overall market decline.
Foreign and domestic institutional investor flows into Indian markets have also mirrored the downward trend, further exacerbating the prolonged bearish phase.
Indian stock market struggles persist
The outflow of funds has added pressure to the already struggling market.
Despite the current challenges, the roll-over action in India’s derivatives markets suggests that investors are preparing for potential opportunities that may arise from the increased volatility. Some market participants remain cautiously optimistic about the long-term prospects of the Indian market. As the Indian stock market navigates through this difficult period, investors are closely monitoring global and domestic factors that could influence the market’s direction.
The ongoing uncertainties and the persistent bearish sentiment have made it challenging for the market to find a solid footing. The road ahead for the Indian stock market remains uncertain, with the possibility of further volatility and downside risk. However, some experts believe that the current market conditions may present opportunities for long-term investors who can weather the storm and capitalize on the potential recovery in the future.
Image Credits: Photo by Markus Spiske on Unsplash
