Nifty Is Down 26% From Its High

General
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Disclaimer: I am a little lazy to type out my views and I have used AI for the same. So this post is not some random AI article. This is how I look at market and my analysis.

(Over to AI)

I came across an interesting way of looking at the current Nifty correction that I thought was worth sharing.

Nifty made its previous major closing high of 26,216 on 26 September 2024. The latest close is around 22,422.

That’s a decline of roughly 14.5%.

But what happens if we measure Nifty in US dollars?

The calculation

At the September 2024 peak:

Nifty = 26,216
USD/INR = ~83.64

So:

26,216 ÷ 83.64 = ~$313

Today:

Nifty = ~22,422
USD/INR = ~96.3

So:

22,422 ÷ 96.3 = ~$233

That’s a decline of roughly:

25–26% in dollar terms.

And suddenly the market looks very different.

The interesting part: January 2026

Nifty actually made a new record closing high of 26,329 on 2 January 2026.

But by then USD/INR had moved to around ₹90.

So the Nifty’s January 2026 record was worth only around:

26,329 ÷ 90 = ~$292

Compare that with the September 2024 peak of approximately $313.

So we had an unusual situation:

Nifty made a new all-time high in rupees, but not in dollars.

For an Indian investor, January 2026 was a new record.

For a dollar-based investor, it was still below the September 2024 peak.

Are we in a bear market?

Again, it depends on how you measure it.

In INR terms:

26,216 → 22,422 = −14.5%

So we’re still in correction territory.

In USD terms:

$313 → $233 = −25.7%

That’s comfortably beyond the conventional 20% bear-market threshold.

So from a dollar perspective, the Nifty is already in bear-market territory.

(AI assistance ends)

At some point our markets will look attractive to FIIs. I do not see a lot of downside from here. But the active ones in this forum know that I wasn’t expecting more correction even a month back at 24k. Anyways. Let’s hope for the best.

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Good use of LLM. :100:
Personally I think there will be some play to shake out weak hands near 22k. :shaking_face:

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If doing this, then need to look at all previous bear markets in same way.

Also Google search AI says this about current forward PE which i thought was approaching 16. But it may not be that yet.

In April 2021, the NSE shifted from standalone to consolidated earnings data. This structurally lowered reported P/E figures by 15% to 20% overnight because consolidated corporate earnings are inherently higher. Today’s 17.0x consolidated forward P/E is roughly equivalent to a 20x standalone P/E in older cycles

So when we are comparing against past PE, need to check if this is factored in. ofc, forward PE itself is an estimate.

I am no expert, my own portfolio is still 0% equity because i am evaluating other options in trading and will only enter in case of a major crash or atleast some long term muted returns. Maybe i am biased because of that, but rising US yields i think is a major barrier to quick recovery, unless ofc indian earnings expand a lot.

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Nothing will not happen

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Another thing, even earnings in dollars will go down no? It wont increase 1:1. So price is cheaper in $ but earnings are lower too.

Maybe for IT and pharma there will be better pass through, but perhaps less so for others.

I like to hear S Naren’s views from time to time. He says that large caps are reasonably valued now vs mid/small caps, but earnings are muted and equity is not a screaming buy right now.

So he keeps repeating focus on asset allocation which he has been for few years. Only sector wise he is positive on banks and insurance ( he has a contra mindset).

Anyway, next few weeks we probably will see a bounce. Downmove seems quite stretched.

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Yeah, USD/INR makes quite a difference here. Nifty is down around 14-15% in rupee terms, but with USD/INR moving from ~83.6 to ~96.3, the fall comes to nearly 26% in dollar terms.

At the same time, SIP flows have gone from ~₹96,000 crore in FY21 to around ₹3.5 lakh crore in FY26. So while the dollar drawdown is much bigger, the domestic flow base is also much bigger than it was earlier.

Anyways, I’ve started putting some money into large and mid-cap funds now. Let’s see how it plays out from here.

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@Jason_Castelino The more Nifty falls, the better the chances of higher returns in the coming financial year. :joy:

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2.5% annualised returns since high of 2008 against the dollar :zipper_mouth_face:

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I personally think it’s undervalued. In sept 2024, I kept posting here that it’s overvalued. Proved to be right then. Hopefully I am right this time too. Last time I was away from equity and every time market went up there was opportunity cost. But this time I am well invested and every time we get dips, there is real cost. :face_with_tongue:

Yeah. DDs are bigger than they appear.

Agree. But to some extent earnings are covering inr depreciation.

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For sure. Let’s go to 21500. Otherwise your complex calculations will all go waste. :wink::rofl:

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@Jason_Castelino NSE also has a NIFTY50 USD Index. Will help you save calculations next time :laughing:

NIFTY50 USD_418569_2026-10-04_23-05-50
NIFTY50 USD_418569_2026-10-04_23-05-501380×1079 72 KB

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19800 now.

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@SpacemanSpiff asked for the earlier falls measured the same way, so I ran it: Nifty 50 closes divided by USD/INR, back to December 2003.

@Jason_Castelino, your numbers check out: −14.5% in rupees and −25.7% in dollars since September 2024. It’s also the usual pattern. The Nifty has had ten falls of 15% or more in rupees since 2003, and in dollars nine were deeper and one was level. 2008 was −60% in rupees and −68% in dollars. 2010–11 was −28% and −40%.

The bigger difference is time. In rupees the index was back at its 2008 high in under three years. In dollars it took almost ten, till November 2017, and it rose 66% in rupees over that stretch. So a rupee high that isn’t a dollar high isn’t unusual: about 220 of the 489 closing highs since 2003.

Note: Nifty price index without dividends; USD/INR daily closes from Yahoo Finance.

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Thank you so much for adding value.

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Almost all times we went below 200WEMA, it was a 25% crash from there. Why only 19800?

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Question we need to ask is why it will break 200 wma?

Last two times it broke was 2008 and 2020.

Is the current situation like 2008 and 2020? Is Dow jones and Nasdaq behaving like 2008 and 2020?

One reason could be - Maybe it is something related to India only. But what is it? Modi retiring ?

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Jason would probably say, no need to bang your head and question all that. if it breaks, it breaks. If it doesn’t then it does not.

It already touched it even when US indices are at ATH. Clearly there’s a divergence. Personally, At a fundamental level I’ve always been negative on India mainly because the “ease of doing business” has not been improved in all these years - I don’t think Nifty deserves these lofty valuations because new innovation is unlikely to grow in such corrupt unfertile ground. There maybe many other reasons - bond yields, oil, deficit etc. But, nevertheless, reasons are for moneycontrol editors to manufacture after the fact. Fundamental reason is whales are selling! Why? They’ll tell to moneycontrol after they’ve done it.

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This has always been true, country grows inspite of all this not because of. So unless something changes dramatically, and we keep expectations grounded, Nifty will probably keep growing at a decent pace.

I think AI markets are crazy right now, loss making companies demanding trillion+ valuations, committing to infratructure spending that is more than ~10x their revenue while not actually being profitable. It smells wrong to me, and AI while useful, isn’t actually AI and doesn’t seem to be universally useful. Makes a lot of mistakes too. IT companies disrupted, probably. But not all industries.

If i had to choose at gunpoint on Nifty vs say Nasdaq today, ill pick Nifty. But for now ill stick with bonds and gilts.

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You give your answer man. Why drag me. :hugs: