Mumbai, March 2: The month of March has historically been favorable for the Indian stock market, but whether it will reverse the ongoing downtrend remains uncertain. The Indian stock market has been witnessing a continuous decline for an extended period. On the last trading day of February, the Nifty 50 plunged by 420 points, closing at 22,124.70. This marks the longest losing streak since 1996, with Nifty falling nearly 15 percent from its September peak, making India one of the weakest-performing global markets.
As per agency report, several factors have contributed to this decline, including weak corporate earnings, heavy selling by foreign investors, and uncertainty over U.S. tariff policies. Since the end of September, foreign investors have withdrawn approximately 25 billion dollars from Indian equity markets, with February alone witnessing 4.1 billion dollars in outflows. The cumulative loss for investors has now reached nearly 85 lakh crore rupees (around 1 trillion dollars).
Investors are now looking toward March for a potential market recovery, as historical data shows that this month has generally been positive for Nifty. Over the past ten years, Nifty has gained in March seven times, specifically in 2016, 2017, 2019, 2021, 2022, 2023, and 2024, while declines were recorded in 2015, 2018, and 2020. However, some analysts caution that “March seasonality alone may not be enough to reverse the downtrend.” Experts believe that for a sustainable recovery, strong economic indicators and structural improvements are necessary.
Small and Mid-Cap Stocks Hit Hard
The ongoing market downturn has had the most severe impact on small and mid-cap stocks. In February, the Nifty Small Cap 100 and Mid Cap 100 indices declined by 13.2 percent and 11.3 percent, respectively. From their highs last year, the small-cap index has fallen 26 percent, while the mid-cap index has dropped 22 percent.
Kotak Institutional Equities CEO Pratiksha Gupta noted that mutual funds, insurance companies, and portfolio management funds are now hesitant to invest in equities. Mahesh Patel, CIO of Aditya Birla Sun Life Asset Management, believes that uncertainty over U.S. tariff policies will continue to exert pressure on Indian markets. According to him, India may remain a “sell on rise” market, meaning investors could book profits during minor rallies, reducing the likelihood of a sustained recovery in the near term.
What Should Investors Do?
Amid the ongoing downturn, investors are shifting toward safer assets such as gold and government bonds. Analysts advise long-term investors to adopt a cautious approach and remain patient until market stability returns. The coming weeks will be crucial in determining whether March can once again be a turning point for the Indian stock market.
