Nifty's 30-year record at risk: Is it time for investors to panic?

Extending losses for the sixth straight session, the Indian equity benchmark index NSE Nifty50 ended marginally lower on Tuesday, down 6 points at 22,547 level. With just two days left in this month, Nifty50 is on the verge of registering its longest losing streak in 30 years if it settles with monthly losses in February. This would be the first time since 1996 that the Nifty50 logged losses for five straight months, a rare incidence that has happened only twice after the National Stock Exchange (NSE) benchmark was launched in July 1990.

The historical data suggest that the Nifty recorded its worth monthly performance in 1995, when the benchmark index posted its longest losing streak of 8 months, from September 1995 to April 1996, falling over 31% during this period. This was followed by five months of continued decline between July-November in 1996, eroding its market value by 26%. Adding to it, the index logged monthly losing streak of four months on three occasions – Oct-Jan 1991, May-Aug 1998, and Jun-Sept 2001.

Nifty down 4% in February so far…

Out of 18 trading sessions so far in February, equity benchmark index Nifty has consistently ended in negative terrain, barring two occasions on February 4 and February 17. During this period, the Nifty has lost 960 points, or 4%, as market faced headwinds from relentless of FII selling and global uncertainties relating to Trump tariffs. In the calendar year 2025, the Nifty has corrected over 5%, while it is down over 12.6% from its Sept’2024 high of 25,811.

In the market correction, which started from October 2024 till date, one in every five Nifty constituents has declined over 28% in the past five month.  Among individual stocks, Trent, Adani Enterprises, Asian Paints, BPCL, Hero MotoCorp, Bajaj Auto and Tata Motors have been the worst performing, losing over 30% of their market value.

Bumpy road ahead

Despite sharp correction in the recent past, the equity market is expected to remain fragile in near-term and heightened volatility is projected to persist in Q1 CY25. “We expect near-term weakness and heightened volatility for Indian equities in Q1 CY25. However, a gradual consumption recovery is anticipated in H2 CY25, led by an improvement in employment trends, a revival in unsecured lending, and an uptick in welfare spending, said Emkay Institutional Equities in a recent report. The research house projects Nifty to be at levels of 25,000 by December 2025, and FPI selling to subside by Q2 CY25.

“Market sentiment is expected to remain cautious in the near term due to persistent pressure on the rupee, ongoing FII outflows, and tariff-related developments,” said Vinod Nair, Head of Research, Geojit Financial Services. Key macroeconomic indicators, including the U.S. Core PCE and GDP data for both the US and India, will be instrumental in shaping expectations for the central bank's future monetary policy, he added.

Foreign Institutional Investors (FIIs) have been a key driver of India's stock market for years, but for the past five months there has been a significant foreign fund outflow from the domestic equity market. They have pulled out equities worth over ₹2 lakh crore since October 2024, while total selling in 2025 stood at ₹11,2492 crore. After withdrawing equities worth ₹81,903 crore through the exchanges in January, FIIs pulled out another ₹30,588 crore so far in February, which can be attributed to higher valuations and weak corporate earnings, and slowdown in economic growth.

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