Nifty Drops 16% as Markets Crash

The Nifty 50 Index has experienced its longest losing streak since its inception in 1996, with its fifth consecutive monthly loss. The Indian stock market has been under massive selling pressure since October 2024. This has pulled the benchmark Nifty 50 down nearly 16% from its record high of 26,277.35, which it hit on September 27. The broader index, the Nifty 500, has fallen further, down 19% from its all-time high. The key factors behind the recent decline are weak corporate earnings, heavy foreign capital outflows, and slowing domestic economic growth.

Sensex and Nifty Drop 16% from Peak Levels

The ongoing market downturn in the Indian equity market has erased a whopping ₹94 lakh crore of investor wealth in the past five months, with both the Nifty and Sensex falling sharply to 16% from their lifetime highs in September 2024. In CY 2025, the NSE Nifty and BSE Sensex have lost up to 7%, wiping out ₹62 lakh crore of investor wealth. The market capitalisation of BSE-listed companies slipped to ₹384 lakh crore at the close of trade on 28 February from the record high of ₹478 lakh crore in September 2024.

The 30-share BSE benchmark Sensex tanked 1,414.33 points or 1.90% to finish at 73,198.10. In the daytime, it crashed 1,471.16 points or 1.97% to 73,141.27. Also, Nifty dropped 420.35 points or 1.86% to 22,124.70, extending losses to the eighth straight day. The indices are down 6% for the month.

Stock Market Crash: Nifty and Sensex’s Sharpest Decline Since 2020

The Nifty plummeted 4,152.65 points, or 15.80%, from its lifetime high of 26,277.35 on September 27, 2024. This was the sixth-largest drop since the 2008-2009 Great Recession and the second-largest since the COVID-led crash in March 2020. The BSE benchmark, which hit a record peak of 85,978.25 on September 27 last year, has lost 12,780.15 points, or 14.86%, since then. On 28 February, investors lost ₹9 lakh crore, bringing the overall wealth erosion for the week to ₹20 lakh crore, hinting at increasing market volatility. 

On Friday, the market capitalisation of BSE-listed firms declined by ₹9,08,798.67 crore to ₹3,84,01,411.86 crore ($4.39 trillion), following the sharp decline in equities. Their market cap has decreased by ₹93.91 lakh crore from September 2024’s record high of ₹4,77,93,022.68 crore.

Mid and Small-Cap Indices Face Sharp Sell-Off

The more extensive and domestically centred mid-cap index confirmed a bear market, falling more than 20% from its September 24 record close. Earlier, the small-cap index had confirmed the trend. In February, the mid-cap and small-cap indexes declined 11% and 13%, respectively, their worst monthly performance since the COVID-19 pandemic-induced selling in March 2020. Further, on Friday, the Indian rupee depreciated 19 paise to close at 87.37 against the US dollar.

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Tech Mahindra, Wipro, and Persistent Systems Drag Nifty IT Down

The Nifty IT index, which monitors the performance of 10 leading IT companies, was the worst-performing sector. It ended the session with a 4.18% decline, hitting a six-month low of 37,167. Friday’s decline was also the index’s most significant intraday drop since April 17, 2023, when it fell sharply 4.71%. All 10 index constituents closed in the red, with Tech Mahindra, Wipro, and Persistent Systems suffering losses of up to 6%.

In the case of Nifty 50 index, 45 stocks closed with deep cuts. Tech stocks such as Tech Mahindra and Wipro dropped 6.3% and 5.7%, respectively. Tata Group stocks, including Tata Consumer Products, Titan Company, Tata Motors, TCS, and Tata Steel, declined between 1% and 5%.

Moreover, according to Trendlyne data, 148 constituents of the Nifty 500 index tumbled to fresh 52-week lows in today’s session. Some key stocks include TBO Tek, Jio Financial Services, Tata Technologies, Titagarh Rail Systems, Oil India, Birlasoft, Sonata Software, RailTel Corporation, Elgi Equipments, and Action Construction Equipment.

Why Markets Are Falling: Key Factors Behind the Downturn

Economic Slowdown

High inflation and idle incomes have restricted economic growth. Projections indicate a slowdown to a four-year low of 6.4% for the current fiscal year, down from 8.2% in 2023-24.

Foreign Investor Withdrawal

Overseas investors have withdrawn approximately $ 25 billion since the market’s peak, intensifying the downward pressure.

Corporate Earnings

The Nifty 50 companies reported approximately 5% profit growth in the October-December quarter, marking the third consecutive quarter of single-digit increases. 

Despite the decline, analysts anticipate a gradual recovery. Projections suggest that the Nifty 50 could rise to 24,000 by mid-2025 and 25,689 by year-end, while the BSE Sensex might reach 80,850 by the end of 2025. However, concerns remain about potential rate cuts and tax exemptions aimed at boosting consumption, which could take time to affect the corporate earnings and consumer spending.