The Indian Stock Markets have been on a rollercoaster ride over the past five months, with benchmark indices like Nifty50 and Sensex witnessing significant downturns.
Nifty was trading at an all-time high of around 26,300 levels but, from that point, it came down to the range of 22,800 –22,900 as of 18th February 2025.
If we observe it is a decline of around 3000+ points.
But why are the markets falling so much?
What are the reasons?
In this blog, we will discuss the factors that contributed to the market fall.
There are some reasons which have contributed majorly to the stock fall.
Weak Q3 corporate earnings:
In Q3 FY 25, several major companies reported weaker-than-expected financial results with many experiencing a decline in net profits.
Rising input costs, inflationary pressures, and also a slow down in consumption during the financial year have significantly impacted the profit margins, thereby reducing the net profits.
Not just one segment or sector, but across all the sectors there is slow and weak earnings growth. The continuous disappointing earnings of the companies further added pressure to the stock, and they got hit.
As a result, the broader market has witnessed a steady decline, with investors choosing to book profits.
FIIs selling:
Foreign Institutional Investors (FIIs) have been on a relentless selling spree in India, offloading equities at an alarming rate.
Since September 2024, the total FII outflow has surpassed ₹3 lakh crore, raising concerns among investors.
The trend continued in 2025, with over ₹1 lakh crore already withdrawn. January witnessed a staggering ₹87,000 crore sell-off, followed by ₹29,183 crore in February so far. With no signs of slowing down, investors are left wondering.
FII Monthly Outflow (₹ Crore)
| Month | FII Net Outflow (₹ Crore) |
| February (Till Feb 14, 2025) | -29,183.43 |
| January 2025 | -87,374.66 |
| December 2024 | -16,982.48 |
| November 2024 | -45,974.12 |
| October 2024 | -1,14,445.89 |
Trump Factor:
After winning the November U.S. elections, Donald Trump took charge and started making big decisions, especially on trade. He imposed heavy tariffs (taxes on imports) on Mexico, Canada, and China, creating uncertainty in global markets.
He introduced reciprocal tariffs, meaning if another country taxed U.S. goods, he would tax their goods in return. He first imposed a 25% tariff on metals, then later on fertilizers and pharmaceutical imports.
These higher import costs hurt many industries, making businesses and investors nervous. As a result, market sentiment turned negative, leading to a decline in stock prices.
High Valuation concerns:
Even though the market has dropped from its all-time highs, it still appears overvalued based on certain metrics. Investors remain cautious, as current stock prices do not fully reflect underlying business performance.
For valuations to be justified, corporate earnings need to improve, and companies must get back on track. Until then, concerns about high valuations may continue to weigh on market sentiment.
These are a few reasons which contributed to the fall of Indian Markets.
This article is for educational purposes only and should not be considered as financial or investment advice. Always do your research or consult a SEBI-registered investment advisor before making any investment decisions.
Savart is a SEBI-registered investment advisor, founded by Sankarsh Chanda. The purpose of this content is to educate, not to advise or recommend any particular security. Please remember that investments are subject to market risks. Please conduct thorough due diligence or seek professional guidance before making any investment. Do not believe in any speculations.