The bloodbath on Dalal Street deepened on Monday, with benchmark indices extending losses amid the ongoing West Asia War, in line with a broader global rout.
The Nifty 50 fell 2.6% to 22,512, taking its decline to 14.5% from its 2 January peak and leaving it just 769 points shy of its 52-week low on 7 April 2025.
Peer BSE’s Sensex 30 also fell 2.46% or 1,837 points to 72,696 on Monday, shaving BSE’s market capitalisation by ₹14 trillion.
Major indices around the world mirrored the trend, with Japan’s Nikkei 225 falling 3.5%, China’s CSI 300 down 3.3%, and South Korea’s Kospi sliding 6.5%, as investors reacted to escalating geopolitical tensions and commodity volatility.
However, sentiment showed tentative signs of easing late in the day after Donald Trump said the US would delay planned strikes on Iranian energy infrastructure by five days. Brent crude oil prices fell $5.2 to $101.27 per barrel, while the GIFT Nifty contract rose 2.9% as of 5.53 pm, signalling a potential relief in near-term sentiment.
Broad sell-off
On Monday, sell-offs in the midcap and the smallcap spaces were much higher than the benchmarks, with the Nifty Midcap 100 index falling 3.9% and the Nifty Smallcap index falling 3.78%.
The Nifty Smallcap index is now down 21% from its 52-week high on 17 July 2025, indicating it has entered bear market territory. Notably, a fall of more than 20% in a year signals the start of a bear market.
MCX Gold also fell sharply by 8.9% to ₹1,33,513 per 10 gm, as a stronger dollar and inflation concerns weighed on prices. The rupee fell by 0.2% to 93.98 on Monday.
Cautious outlook
Sudeep Shah, head-technical and derivatives research at SBI Securities, said the overall undertone is cautious to bearish, given the Nifty 50 long-short ratio remained subdued at 14.36% since the past three trading sessions, with a marginal addition of short positions in index futures.
The Nifty 50’s 50-day moving average has slipped below its 200-day average, reinforcing the bearish technical setup.
The ongoing correction in Indian equities has led to a sharp compression of valuation multiples. The Nifty 50 index is trading at a trailing PE of 20.85x, bringing it much closer to the 20-year average of 19.94x. That has meant India, which has historically traded at a premium to global equities, is now trading broadly in line with them.
However, Yes Securities in a report dated 23 March said that despite the sharp correction in valuations, India’s earnings profile continues to remain robust. “Return on equity (ROE) metrics indicate that Indian corporates are still delivering competitive and relatively superior profitability compared to global peers,” the report said, adding that the downside risks are increasingly priced in, while potential upside from mean reversion remains significant.
Historically, such periods of deep valuation compression—especially when not accompanied by earnings downgrades—have provided favourable entry points for long-term investors, the institutional brokerage added.
Over the past four quarters, both earnings and GDP growth have shown signs of rebound, aided by policy support through GST cuts and monetary easing, said Varun Goel, senior fund manager at Mirae Asset Investment Managers (India).
“That said, the earnings outlook remains contingent on how the current situation evolves. If uncertainties persist over the next six months, earnings estimates could see downward revisions. However, it is still too early to determine the trajectory, with expectations that conditions may normalise in the coming weeks,” said Goel.
Ketan Gujarathi, fund manager at Quantum Mutual Fund, said the base case was that the disruption would be short-lived, but a scenario is also being evaluated where it persists for a couple of quarters.
“In such a case, earnings could see a 3-4% downside impact, primarily due to rising inflationary pressures. If higher input costs—especially from crude—are passed on to consumers, it could hurt consumption, which in turn affects corporate earnings,” Gujarathi added.
