The Indian equity markets continued their bearish trend during Navratri, as both major indices witnessed significant declines during the festive period.

Market Performance

During the eight trading sessions of Navratri, the Sensex experienced a decline of 1.99%, while the Nifty fell by 1.94%. This downturn follows a pattern observed in recent years, with 2021 being the last time both benchmarks delivered positive returns of over 3.5% during the festival period.

Factors Behind the Decline

The market's poor performance has been attributed to several factors:

• Concerns over higher US tariffs
• Expensive stock valuations
• Slower earnings growth

Foreign Investment Outflow

Adding to the bearish sentiment, foreign investors withdrew a substantial Rs 17,000 crore from Indian equities in the first six trading days of the Navratri period.

Mid and Small-Cap Performance

The decline was more pronounced in the mid and small-cap segments:

• Nifty MidCap 100 fell by 3.49%
• Nifty SmallCap 100 dropped by 4.05%

Sector-wise Performance

Most sectors experienced declines, with only PSU Bank and Metal indices posting gains of 1.37% and 1.03% respectively. The IT sector was hit hardest, suffering a 7.31% decline, primarily due to H-1B visa fee increases affecting Indian IT companies.

Market Turnaround

Despite the overall negative trend during Navratri, the markets managed to snap their losing streak following a positive announcement from the Reserve Bank of India (RBI). The central bank kept interest rates unchanged and provided an optimistic outlook:

• Raised growth forecast to 6.8%
• Lowered inflation estimate to 2.6%

This decision by the RBI helped to alleviate some of the market concerns and provided a glimmer of hope for investors amidst the festive season downturn.

As the Indian equity markets navigate through these challenging times, investors and analysts will be closely watching for signs of recovery and potential opportunities in the evolving economic landscape.

The Indian equity markets have been facing significant headwinds, with a broad-based decline affecting a majority of stocks. The Nifty 50, a benchmark index for the Indian stock market, has retreated 6.80% from its peak of 26,277.35, highlighting the extent of the market correction.

Widespread Market Weakness

A comprehensive study conducted by Samco Securities, analyzing 750 listed stocks, has revealed the depth of the market downturn:

• Only 245 stocks managed to deliver positive returns
• 485 stocks traded lower than their year-ago levels
• The median return stood at -11.50%
• The average return was calculated at -6.25%

This data paints a picture of widespread weakness in the Indian equity markets, with two-thirds of Nifty 500 stocks trading below their levels from a year ago.

Factors Behind the Decline

Several factors have contributed to the bearish sentiment in the Indian markets:

• Global conflicts
• Tariff shocks
• Selling pressure from foreign investors

These elements have collectively weighed on investor sentiment, leading to the broad-based decline observed across various sectors.

Sectoral Performance

Despite the overall negative trend, some sectors have managed to buck the trend and post gains:

• Capital markets
• Defence
• PSU banks
• Financials

These sectors have shown resilience in the face of broader market weakness, potentially offering some relief to investors with exposure to these areas.

Alternative Assets Outperform

In stark contrast to the equity market's performance, alternative assets have significantly outperformed traditional investments:

This divergence highlights the potential benefits of diversification across different asset classes during periods of equity market stress.

Market Outlook

The current market scenario presents a challenging environment for equity investors. With a significant portion of stocks trading below their year-ago levels, investors may need to reassess their portfolios and investment strategies. The outperformance of alternative assets suggests that a diversified approach could help mitigate risks in volatile market conditions.

As global and domestic factors continue to influence market sentiment, investors and market participants will be closely watching for signs of a potential turnaround in the Indian equity markets.