Nifty down for 5 months in a row; first time since 1996

3 Mar 2025 , 09:27 AM

NIFTY DOWN FOR FIFTH MONTH IN A ROW

The Nifty 50 index is down for 5 month in succession. Here are the monthly returns on Nifty.

Index Name	Date	Close	Monthly Returns
NIFTY 50	28-Feb-25	22,124.70	-5.89%
NIFTY 50	31-Jan-25	23,508.40	-0.58%
NIFTY 50	31-Dec-24	23,644.80	-2.02%
NIFTY 50	29-Nov-24	24,131.10	-0.31%
NIFTY 50	31-Oct-24	24,205.35	-6.22%
NIFTY 50	30-Sep-24	25,810.85

Data Source: NSE

Since the Nifty peaked in late September 2024, the index is down over 15%. What is more disconcerting is that the markets have given negative returns in each of the last 5 months. This phenomenon was last seen in November 1996, so this is happening after more than 28 years. Why this persistent fall and what does it mean?

WHY THIS PERSISTENT FALL IN THE NIFTY?

There have been several reasons for this persistent fall in the Nifty index.

• The peaking of the Nifty coincided with the US embarking on rate cuts in mid-September and worsened since India did not cut rates till February 2025.
• Weakness in the rupee has been a key factor driving markets lower. USDINR has weakened to ₹87.50/$ and that is making the FPIs wary
• The cautious stance of the FPIs and the relative valuations resulted in more than $15 billion of FPI outflows in the last 5 months, underlining the downward trend in Nifty.
• China has attracted a deluge of FPI flows, but what spooked Indian markets was the possibility that China may weaken the Yuan to offset US tariffs.
• Above all, there is the uncertainty created by Trump tariffs, which has also taken its toll on Indian markets.

So, what does this 5-month fall mean for investment strategy?

READING THE MARKET SUB-TEXT

There is a lot of valuation blood-letting that has happened and these stocks are not bouncing back in a hurry. That must be factored into the investment strategy. Once the chaos settles, it will be the blue chips that will show the first signs of revival. The big bet by investors must be on quality and less on momentum. Indian markets may stay a deep value market for some time now!