Indian markets decline for 5 straight months: What should investors do next? | Stock Market News

Indian stock markets have been on a persistent downtrend, marking five consecutive months of losses. The market selloff showed no signs of easing on Monday, March 3, as the 30-share Sensex declined over 400 points in intraday trade, while the Nifty 50 slipped more than half a percent, approaching the 22,000 mark.

The Nifty has shed nearly 15 per cent from its September 2024 highs, erasing 4,000 points amid continuous selling by foreign institutional investors (FIIs). Since October 2024, FIIs have offloaded close to ₹3 lakh crore, adding pressure to an already weakened market. Slowing earnings growth and a shift in global liquidity toward the US and China, where valuations appear more attractive, have further contributed to the downturn. 

Vinod Nair, Head of Research at Geojit Financial Services, stated that investor confidence has been further impacted by rising trade tariff concerns and unfavourable global cues.

So, what should investors do next? Here’s what market experts suggest

Focus on Resilient Stocks, Not Falling Prices

Trivesh D, COO of Tradejini, noted that instead of chasing falling stocks, investors should focus on companies demonstrating resilience. 

“FIIs are closely monitoring domestic investors, and if local buying slows, further pressure may mount. However, this is not a time to panic but rather an opportunity to recalibrate portfolios,” Trivesh D said. He also advised prioritising quality stocks with strong fundamentals over momentum-driven investments.

Sanket Prabhu, Director and Head of Wealth at FINHAAT, pointed out that the market is currently correcting the valuation excesses built over time. He advised investors to utilise this period for staggered investments, accumulating stocks or mutual fund units during dips. By taking a systematic approach, investors can benefit from potential long-term gains as market stability returns, Prabhu added.

Market Cycles and Recovery Patterns Matter

Om Ghawalkar, Market Analyst at Share.Market, emphasized the importance of understanding historical market cycles. The recent market correction, driven by weak earnings, high valuations, and global uncertainties, presents a crucial learning opportunity. 

He urged investors to remain disciplined and avoid panic-selling, as downturns often create missed opportunities. Instead, they should focus on fundamentally strong companies with long-term growth potential and view the correction as a chance to accumulate quality stocks at attractive valuations, Ghawalkar said.

Technical Indicators Signal Caution

Vinay Rajani, Senior Technical & Derivative Research Analyst at HDFC Securities, highlighted key technical indicators pointing to continued bearish sentiment. The Nifty fell 3 per cent in the February series, marking its fifth consecutive series loss—a first in the history of India’s derivative markets since 2000. FIIs’ long-to-short ratio in index futures at the start of the March series stood at 0.19, indicating that nearly 84 percent of their positions in index futures are short.

Rajani further noted signs of bearishness, including long unwinding in Nifty futures, short buildup in Bank Nifty futures, higher-than-average rollover in both indices, and aggressive FIIs selling in the cash markets. Additionally, significant call writing at the 23,000 level suggests a cautious stance for the March series.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.