Markets Have Dropped Nearly 13% From Their Peak Since September 2024: How to Navigate These Volatile Conditions?

Article By Dev Tanwar

Since peaking in September 2024, both the Nifty 50 and BSE Sensex stock indices have dropped by about 13%. As of February 17, 2025, the Nifty 50 is at 22,827.65, and the Sensex is at 75,610.25. This decline is mainly due to weaker corporate earnings and ongoing foreign investment outflows.

The Nifty 50 reached its highest point of 26,277.35 on September 26, 2024, while the Sensex hit 85,978.25 on September 27, 2024.

Smaller stocks, especially mid- and small-cap ones, have taken the biggest hits. The Nifty Smallcap 100 index has entered a bear market, falling over 20% from its peak on December 11, 2024. Similarly, the Nifty Midcap 100 index has declined by approximately 17.7% since September 27, 2024. These downturns are primarily attributed to factors such as weaker corporate earnings, high stock valuations, and substantial foreign investment outflows.

This highlights the need to stay informed and focus on the long-term perspective when navigating market fluctuations.

1. Stay Calm and Invest Gradually: It’s easy to get worried when the market moves up and down, but remember that markets go through cycles. Stay calm and don’t act impulsively. Keep investing in large-cap mutual funds or strong, established stocks, but do it gradually. You can also continue with your SIPs (Systematic Investment Plans) to invest steadily over time. This method helps you average your buying price and lowers the risk of investing at the market’s highest points, helping you stay on track during market ups and downs.

2. Diversification: Keep diversifying your investments to reduce risk. This can include adding other asset classes like bonds, hedge funds, real estate, fixed deposits, precious metals, etc. depending on how much risk you're comfortable with and your financial goals.

3. Booking Profits and Staying Informed: Set regular times to take profits so you can secure your gains and manage risk. This helps you avoid relying too much on short-term market changes. It’s important to stay informed by watching things like the economy, company earnings, and market trends, but try not to react to every bit of news. A calm and informed approach will help you make decisions based on facts and your long-term goals, not on short-lived market feelings. Keep checking your investments regularly and make changes if needed, based on how the market is doing or if your goals change.

In conclusion, the market's decline of nearly 13% from its September 2024 peak highlights the challenges of navigating volatile conditions. While short-term fluctuations can be unsettling, staying calm and focusing on long-term strategies is key. By investing gradually, diversifying your portfolio, and maintaining a disciplined approach to booking profits, you can manage risk effectively. Additionally, staying informed and making decisions based on facts rather than emotions will help you stay aligned with your financial goals. Remember, markets move in cycles—keeping your focus on the bigger picture will help you weather these fluctuations.