All the market index reached their peak during the end of September last year and the beginning of December. But from there they slipped in such a way that they do not seem to stay. The Nifty 50 index has fallen 13 percent, the Nifty 500 and the Nifty Midcap have fallen 16 percent and the Nifty smallcap and microcap have collapsed about 20 percent. The fall in both indices has disturbed investors.
The Indian market has changed a lot in the last three years. Now the Nifty 50 or Nifty 500 is no longer the scale, which we have seen yet. Since 2021, smallcap and midcap have jumped a sharp jump and the investment of retail investors and mutual funds has also increased their status in the market. These days, most of the initial public issue (IPO) is coming from microcap companies. Smallcap and midcap shares have climbed such that the smallest midcap company has also evaluated Rs 28,000 crore. The largest midcap company evaluates close to Rs 1 lakh crore. Smallcap has a lot of names but many of them have a market assessment of Rs 10,000 crore or more. At this time all these are the backbone of the market, but the future of this category does not look great.
The top index are not telling how much expensive shares of this category have been beaten. In reality, those shares have fallen by 30-40 percent as if falling is their case, then their quarterly results have been good or bad. Selling is going on in the market right now – if the results are bad then sell shares. Even if the results are good, sell shares because they have become very expensive. Dozens of sector and sub-sector have been hit by this fever. Now what next? If it was a ‘decline’, is it now passed and will dominate the sharpness from here? I do not know whether it was a decline or not and now it has stopped or not. But one thing is confirmed, the speed we had seen in the market for the last few years will not return soon. The market of Tejadis now has gone.
The market fast occurs due to several reasons for the moderate period, which are local and international. There were many reasons for the market to rise from 2021 to 2024. The government’s huge capital expenditure in various areas including rapid recovery of the country and the world from the sluggishness of 2021 due to Kovid and rail, defense, transport, renewable energy, construction, water, sanitation was prominent among them. This led to a boom in the stock market and the arrival of millions of new investors and social media influencers led to the prices of shares. In these, the prices of smallcap especially arose and the process continued.
The process of boom after Kovid has now stopped to a great extent and economic growth is becoming sluggish. That is why the revenue of the government is decreasing, due to which the scope of capital expenditure is also decreasing. Nevertheless, an allocation of Rs 11 lakh crore has been made in the budget, but the projects are getting a slow pace. The general election and model code of conduct were due to the approval of projects in the first five months of FY 2024-25, but now this excuse is not working. The bottom line is that the market has stopped fast and now the process of decline has started to get the right price.
The right cancer has been completed by US President Donald Trump. As soon as he arrives at the White House, there has been confusion, challenges and conflict, which is very difficult to understand and it is even more difficult to guess what its effect will be. All the decisions of the Trump administration so far seem to be bad for India. Recently he demanded to reduce the duty on import of Tesla cars from India and India also accepted the demand. India wants that under this deal, Tesla set up factory somewhere in the country, but Trump is looking for this unbearable demand. The good thing is that even after completely eliminating the fee, many American products will not be able to compete with the products here and will not be able to sell more. But India’s trade and industry policies will mean the strictness of Trump. The risk for India is particularly high because we do not have much option in terms of business. Overall, the Indian economy and markets are struggling with many challenges and policy makers do not have the ability to deal with them. Only its heat companies will have to bear the shares of those who have more evaluation.
But this does not mean that the market will not climb at all. Shares do not fall continuously. But there will be no reason for such a boom. As before, India’s economic growth rate will be between 5-6 percent and I have told the reasons in my previous articles many times. Economic policies are more or less the same as before and the economic environment is not proper to the companies. Consumption has decreased among common people (due to low increase in income and high inflation) but more among the rich. In such a situation, there is no innovation and there is no economic growth on the strength of productivity, while productivity growth can only create money for a long time. In the last two years, the high capital expenditure was an exception and if it continues even further, it will be the only good news.
Even in such an unfavorable situation, India will have tremendous pressure to buy weapons and oil during Trump’s four -year tenure, reduce the fee and open the market. India has no response to these deadly, unilateral and selfish policies of America under Trump. It is also not clear whether Trump will be able to make America ‘great’ again. If Elon Musk’s Ankush on equal fees, strictness in immigration and ‘government extravagance and waste of resources’ damaged the US economy, then the economic growth in the second half of 2025 could be sluggish. India will also have a loss because America is its largest export market. When such bad news came together, India does not have the ability to fight them.
First Published – March 3, 2025 | 10:03 pm IST
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