Markets: More dark clouds gather

The Indian stock markets have experienced a remarkable surge over the past four years, recovering from the depths of despair during the pandemic.

- DEBASHIS BASU

The Nifty 50 closed at 8,598 at the end of March 2020, and no one could have predicted the extent of rebound: A pandemic, the Russian invasion of Ukraine, Western sanctions, a slowdown in China and Europe, and even the loss of a parliamentary majority by India's ruling party, led by an extremely popular leader. By the end of September this year, the index had soared to 25,810, a threefold and more increase in just over four years. The Nifty Small Cap Index performed even better with a fivefold rise. All good things come to an end or, in the case of the markets, come to a halt for a while. Over the past six weeks, the Nifty 50 dropped 9 per cent, while the Small Cap Index fell 8 per cent.

Though experts play down these declines, I'm not so sure. This could mark the beginning of a sluggish phase or even a prolonged downturn. A variety of local and global factors will determine the direction, and many of them are beyond the Indian government's control. One key issue that needs to be watched is Donald Trump's sweeping victory in the United States (US) presidential election.

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