India's stock market decline wipes out $1.3 trillion in market value – can investors stay optimistic?
More than $1 trillion has been wiped off from India's stock market after investors turn to China. Has the emerging-market darling hit rock bottom?

India’s “loyal retail traders” are being tested like never before, says Chiranjivi Chakraborty on Bloomberg. A long stock market boom ran into trouble in September, when an unanticipated economic slowdown and analysts’ downgrades to companies’ earnings forecasts knocked India’s richly priced shares – $1.2 trillion has since been wiped off valuations. Global funds withdrew an estimated $26 billion between October and February.
Local investors had kept things ticking along, but even they now appear to be losing enthusiasm, with inflows into domestic mutual funds down 30% since a record high in October. India has been an emerging-market darling in recent years, with the BSE Sensex Index surging 187% between the March 2020 Covid trough and September 2024. Yet, since then, the index has slipped more than 10%.
Many small investors in the Mumbai bourse only got into investing during the Covid-era boom, making this their first market slump, says Veena Venugopal in the Financial Times. Local fund managers are feeling pessimistic, with no immediate “triggers” for a recovery in view and plenty of risk as Donald Trump prepares to unveil new “global tariffs”. “India’s loss is China’s gain.” Global money managers have been distracted by Chinese technology, with Hong Kong’s Hang Seng Tech Index rallying 25% this year amid the DeepSeek mania.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
India’s NSE Nifty 50 suffered five straight months of losses through February, its worst losing streak since 1996, says Reuters. Smaller stocks have been especially hard hit, with the Nifty small-cap 100 index dropping 22% from September’s record high.
IT is the latest target, with foreign portfolio investors selling $3.5 billion worth of shares during the first half of March. A large chunk of Indian tech revenue comes from the US, leaving the sector exposed to Trump’s tariff whims.
Has India hit bottom?
By global standards, Indian stocks remain among the world’s priciest, says Craig Mellow in Barron’s. But recent losses arguably constitute a “healthy correction”, with price/earnings (p/e) ratios back to historical averages. State spending “sputtered” after elections last year but shows signs of “picking up again”.
India’s exports are dominated not by goods but by services, which do not attract as much of Trump’s ire. And with a median age of 28 (compared with 38 in China) a demographic dividend is coming through.
Indeed, the BSE Sensex has staged a 6.5% rally since the start of the month, but buying in still requires bravery. “The last shoe to drop will be when retail investors capitulate and sell,” says Arthur Budaghyan of BCA Research. He predicts “at least another 15% drawdown in Indian stocks” before the bottom is in.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
PZ Cussons share price down 75% in last decade
Opinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
By Jamie Ward Published
-
Cash in on the biotech sector with specialist BioPharma
Opinion BioPharma has an attractive niche in lending to asset-rich biotechnology companies
By Rupert Hargreaves Published
-
PZ Cussons share price down 75% in last decade – why it's one to watch
Opinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
By Jamie Ward Published
-
Cash in on the biotech sector with specialist trust BioPharma
Opinion BioPharma has an attractive niche in lending to asset-rich biotechnology companies
By Rupert Hargreaves Published
-
Pensions revolution: how to profit from the trends shaping the UK pension system
The UK pension system is one of the biggest in the world. Big changes are under way, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Large cap stocks start to struggle – is it time for investors to reassess their focus?
Buying quality large caps worked very well last decade. A more volatile world will be a bigger challenge for these star stocks, says Cris Sholto Heaton
By Cris Sholto Heaton Published
-
How to generate income with fixed-interest investments
Public debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King
By Max King Published
-
Three top-notch Taiwanese companies cashing in on the advent of AI
Opinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
By Eric Chan Published
-
Weight-loss drugs could revolutionise the economy – the investments to buy now
The new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
By Dr Matthew Partridge Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published