NIFTY50 down 16% from all-time peak: Piyush Goyal says index valuation decent, expect more correction

Data shows that the NIFTY50 index is trading (as of the February 28 close) 15.8% lower from its record high of 26,277.35. Similarly, the benchmark index of the BSE, the S&P BSE SENSEX, has slipped 14.8% from its record high of 85,978.25, touched on September 27, 2024.

Foreign investors pulled ₹34,574 crore from the Indian equity market in February, pushing total outflows to ₹1.12 lakh crore in the first two months of 2025 amid rising global trade tensions and concerns over corporate earnings growth.

"Elevated valuations of Indian equities, alongside concerns about corporate earnings growth, have led to a sustained outflow of FPIs," Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors, said.

The massive selling by FPIs has resulted in the BSE's benchmark Sensex falling over 6.5% year-to-date.

The recent market sell-off has been influenced by rising US bond yields, a strengthening US dollar, and global economic uncertainties, leading to a shift in investor focus toward US assets.

Bhowar added that the earnings reports for the third quarter of fiscal year 2025 have been modest, indicating uncertainty. This issue is further compounded by falling commodity prices and reduced consumer spending, which adversely impact corporate profits and diminish the appeal of Indian equities to foreign investors, the expert added.

"FPIs are focused on selling in India because valuations in India are high and moving money to Chinese stocks where valuations are much lower," Bhowar opined.

Amid the massive sell-off, Union Minister Piyush Goyal on Saturday said that the 50-share benchmark NIFTY50's valuation is decent and reasonable.

Goyal, who oversees the commerce and industry portfolio, said the Indian markets may experience further corrections.

A forward price-to-earnings ratio of 19 makes the NIFTY valuations "decent" and "reasonable."

"Some of them (Nifty stocks) may have seen some downfall, but by and large the Nifty still reflects decent valuations," Goyal said, speaking at an event organised by the mutual fund industry's lobby grouping AMFI in Mumbai.

Goyal said that the ongoing correction in the markets should serve as a wake-up call for the ones who have not advised the small investors properly, and asked AMFI to ensure that it isolates those who have given bad advice to clients.

The minister also suggested that MFs should not give up on their duty and commitment to the larger market, and not concentrate on the returns alone.