Stock Market fall can be even more painful' Expert said - recession like 2016!

The decline in the stock market is not stopping. Today, the Sensex closed 217 points down at 74115. Although the Nifty closed 92 points down at 22,460. Meanwhile, Saurabh Mukherjee, founder of Marcellus Investment Managers, has warned investors. He says that the Indian stock market is going through a recession and global policies, especially Trump's economy policy, can be more painful for the market.

We had a very good three years in India. Post-Covid, FY22, FY23 and FY24 were great years and if you look at India's history, it is very rare for the market to grow for four consecutive years.

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Usually by the fourth year we see a recession, because our labor market, capital market and land market do not have the capacity to sustain rapid growth for four consecutive years.

Decline in the stock market is not stopping

He said that banks are facing cash problem, which is affecting loan growth. Deposit growth in banks is low and loan growth is also declining. This is a sign of supply weakness. People have withdrawn money from their savings accounts and put it in the stock market, which has led to a rise in stocks, but cash in the banking system has decreased.

Similar to 2016, when the market grew for two-three years, then started growing again within a year. Painful recession - as happened in 2012-13.

One of the market experts said, that when the dollar strengthens, the RBI has to tighten liquidity by withdrawing rupees from the system.

But when the economy weakens, the RBI should cut interest rates, but to protect the rupee it has to raise interest rates. This leads to a painful situation as seen in 2012-13.

Trump's policies can cause more pain

Mukherjee warned that Donald Trump's economic policies can further strengthen the dollar, which can lead India's stock market towards an even more painful recession.

He said that I fear that Trump's actions can strengthen the dollar even more. If he continues to strengthen the dollar by imposing tariffs on other countries, then this will become an even more painful recession.

While the indexes have fallen so much

Market expert concerns have come at a time when the BSE Sensex has fallen 13% since October 2024 and the mid-cap and small-cap indices have fallen 22% and 25% respectively. Jimeet Modi, founder and director of Samco AMC, recently warned that it may take more time for the five-year bull market to end.

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Nifty Midcap 150 and Smallcap 250 still have some bounce. It is not possible for the 5-year bull market to end in five months. However, some market experts believe that the market is already in the process of reaching the bottom.

Recession may be like 2012-13

According to stock market expects the recession to be similar to 2016, when the market slows down for a few quarters and then comes back up. But he warned that Trump's economic policies could turn it into a painful recovery like 2012-13.