Indian Stock Market in Correction: Nifty, Sensex Down 10%, What Lies Ahead - Read Now 

The Indian stock market remains in correction. Nifty and Sensex have been down 10% from their peaks in September. Experts claim that weak Q2 FY25 earnings, coupled with the surge in inflation and sustained foreign fund outflows, are the primary drivers of the downturn.

Market Trends

Nifty ends at 23,532.70, down by 26 points on Thursday, closing at the same date. The Sensex closed at 77,580.31. The market is visibly low, and investors don't understand mixed signals such as:

Weak Q2 FY25 Results: Bottom line failed to deliver value on premium valuations.

Inflation Spike: Domestic CPI inflation surged to a 14-month high of 6.2%.

Global Factors: A strong dollar index and increasing US 10-year bond yields have been added factors to market volatility.

Expert Insights

Premium valuations will not be sustainable without fair earnings growth, and investors would continue to book profit from the riskier assets in the current scenario," opined Vinod Nair, head of research at Geojit Financial Services. Nagaraj Shetti of HDFC Securities quotes important support and resistance levels for Nifty:

Support Levels: A decisive slide below 23,500 might drag the index to 23,200–23,000.

Resistance Levels: Sustained movement above 23,700–23,800 will possibly trigger rebound.

Positive phase expected

Experts expect this market to continue to consolidate in the near term. However, value stocks may start to attract bottom-fishing due to their good long-term prospects. Some factors that may help revive H2 FY25 include:

Government Spending: Increased fiscal steps.

Monsoons: A good monsoon that begins to support rural demand.

Sector Revival: Rural and consumption-driven sectors look to turn around and start rising.

Emerging Global Cues

The limelight now falls on the newly elected Donald Trump administration of the US. The policy directions proposed may act as an inflationary driver for the US and thus may influence rate cuts by the Fed in the future. These, in turn, can affect emerging markets like India.

Investment Strategy

Experts would suggest that caution with optimism is the strategy during consolidation. Long-term investors could look to focus upon valuations in stocks that are on strong fundamentals. One also must monitor global trends such as changes in US policies and inflation figures. Knee-jerk reactions to short-term volatility are best avoided.

While recovery of domestic earnings and global economic developments will shape the market, consolidation has opened the doors for selective investments in some beaten-down stocks with promising growth prospects.