India's Stock Market Faces Sharp Decline, Worst Year Since 2008
The Nifty 50 has fallen about 14% this year, making it the worst-performing major market outside Indonesia, while foreign investors have withdrawn roughly $32 billion.
Indian equities have entered a steep sell-off, with the Nifty 50 down roughly 14% year-to-date, putting the index on track for its steepest annual decline in at least 18 years. Bloomberg data shows that, excluding Indonesia, India is now the poorest-performing major market globally for the year.
The broad market has lost close to Rs 30 lakh crore in market value, and foreign institutional investors have pulled out more than $32 billion, adding further pressure to share prices. Among the Nifty 50 constituents, 38 are trading lower, and 25 have slipped at least 10%. ITC, Maruti Suzuki, Jio Financial Services and HDFC Bank have each fallen between 30% and 36%.
Mid-cap and small-cap segments have also turned negative after earlier resilience. The Nifty Midcap 100 is down about 8% this year, with six percentage points lost in the past week. Notable mid-cap losers include KPIT Technologies (-54%) and Aditya Birla Fashion and Retail (-50%). Small-cap stocks such as KEC International (-56%) and Inox Wind (-52%) have suffered similar drops.
Foreign portfolio investors withdrew nearly Rs 48 billion between Oct. 1-15. Vikram Subburaj, CEO of Giottus.com, attributed part of the outflow to higher equity taxes introduced in the July 2024 Union Budget, which raised long-term capital gains tax to 12.5% and short-term tax to 20%. > "India has made equity investment more expensive through higher taxes," Subburaj said.
He added that currency risk and uncertainty over tax liabilities when funds are restructured also deter investors. While higher taxes affect returns, Subburaj noted that global market conditions, valuations and geopolitical risks also shape capital flows. He suggested that clearer rules on fund restructuring and tax settlement could ease some of the challenges facing foreign investors.