481 BSE 500 stocks down over 10% from 52-week highs. Are we in a bear market?

The sharp selloff in the Indian stock market has impacted equities across sectors, pushing most stocks significantly below their 52-week highs.

According to Capitalmarket data, 481 of the 500 stocks in the BSE 500 index had declined more than 10 percent from their 52-week highs by the close of February 25. 417 stocks had dropped over 20 per cent, 306 had fallen more than 30 per cent, and 149 had plunged over 40 per cent.

Notably, 36 stocks—including Sun Pharma Advanced Research Company, Sterling and Wilson, Network18 Media, and Chennai Petroleum Corporation (CPCL)—have crashed more than 50 per cent from their one-year highs.

Among the BSE 500 stocks that have fallen the most from their 52-week highs, Sun Pharma Advanced Research Company stands at the top. The stock has plunged 74 per cent from its 52-week high level of ₹474. It was followed by Sterling and Wilson (down 68 per cent), Network18 Media (down 63 per cent), Chennai Petroleum Corporation (down 61 per cent), Adani Green (down 61.34 per cent) and Whirlpool India (down 60 per cent).

Are we in a bear market?

Weak earnings, economic growth losing momentum and heavy foreign capital outflow have been the prime reasons behind the downtrend in the Indian stock market.

The BSE 500 index is down 17 per cent from its peak of 38,740.08, scaled on September 27. Benchmark Sensex is down 13 per cent from its record high of 85,978.25, which it hit on the same day.

Typically, the index is said to be in a bear territory if it falls more than 20 per cent. If the fall is more than 30 per cent, the chances of a prolonged bear phase is high.

"A market is considered to be in a bear phase when the index declines by 30 per cent. Historically, such downturns tend to last at least six months to a year. However, that is not the case at present," said Prashanth Tapse, Senior VP (Research), Mehta Equities.

Tapse expects the market to be stable after the Q4 results.

"We will hit the bottom very soon in the April-June period after Q4FY25 earnings and before Q1FY6 earnings. Earnings in Q1, Q2 and Q3 have come on a weaker side. If Q4 earnings remain stable or slightly better, the Q1FY26 earnings will be better. Then recovery will start," said Tapse.

What should investors do?

The post-COVID bull run attracted many retail investors to the market. However, the last five months have dealt a severe blow to their risk appetite, infusing them with some sort of panic.

Experts say this is the market for long-term investors. They advise picking quality stocks at reasonable valuations and holding them for the long term.

"Long-term investors should not be worried if quality stocks in their portfolio are down as this downtrend has a valid reason. If there is drastic disappointment on the earnings front, they should rejig the portfolio and buy fresh fundamentally strong stocks," Tapse said.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.