Stock Market has been under pressure due to continuous selling by Foreign Institutional Investors (FIIs). One of the key reasons is the strengthening of the US dollar, which makes emerging markets less attractive. Additionally, concerns over a slowdown in corporate earnings growth, global economic uncertainties, high valuations of Indian stocks compared to other emerging markets, and trump tariff risks have further contributed to the market decline.
Recently Nifty-50 Index had declined 16.41 percent from its peak of 26,277 in September last year to a recent low of 21,964 in March. The total market cap of NSE listed stocks has fallen from 477.93 Lakh crores to 382.71 lakh crores, reducing the investors’ wealth by 95.22 lakh crores.
Nifty’s March Magic
Nifty formed a bottom on 4th March, when it hit a low of 21,964. Since then Nifty has recovered 1,836 points or 8.53 percent and is currently trading at 23,800. Nifty Smallcap 250 recovered 1925 points or 14.33 percent, Nifty Midcap 150 recovered 2,103 points or 12.13 percent
From, 2015 to 2024, Nifty has given only three negative returns in March month. – 199 points in 2015, -100 points in 2018, and -600 in 2020. Since the Covid crash, Nifty has never given any negative return in March month.
Factors that helped Nifty Recovery
The government is constantly working to regain India’s growth momentum. With tax cut announcements, which can help boost the GDP and help with overall economic growth. RBI also cut the Cash Reserve Ratio (CRR) & Repo rate, with further rate cut expectations to boost consumer spending. Additionally, Brent Crude prices are trading in a broad range with reduced volatility, which is highly beneficial for India as the import cost is kept in check, which in turn reduces the trade deficit.
In terms of valuations Nifty 50 PE had dropped below 20, only for the 2nd time in 5 years. It had dropped to 18.92 during the Russia-Ukraine war and had dropped to 17.15 on March 23, 2020. It showed that Nifty was highly Undervalued which led to valuation correction.
Written By Abhishek Das
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
