No one knows.
But here are 3 images of 3 indices that can help you get a sense of how markets fall from what has happened in the past.
The 3 indices we choose are:
Nifty 50 - the bluechip index of the 50 best.
Nifty Next 50 - also known as the junior Nifty, considered gold by passive investors
Nifty Midcap 150 - the return booster
Between the 3, they cover 250 stocks (including most companies that matter) of the Nifty 500 and close to 90% or more of the floating market cap.
What we are looking at is the drawdowns - meaning, from recent peak how much did the index fall?
Let's start with the Nifty 50. What's the worst that you see and when?
Then comes the Nifty Next 50. Is the worst, worse than Nifty 50?
Finally, the Nifty Midcap 150 index. Don't confuse this chart for the previous one!
For all 3 indices the worst happened during the 2008 Financial crisis followed closely by the 2020 Covid led fall. If you put this in context and see what is happening now - well, it's nothing.
Let's look at a more comprehensive comparison of the numbers.
The upper section of the image below shows the median returns for various rolling time frames.
The middle section has the maximum drawdown or the worst that has happened in that index in the last 20 years. The bottom section has the most fall or negative return that has happened during that time period.
What is the latest current drawdown as of Jan 13, 2025 in the 3 indices?
INDEX | DRAWDOWN (from recent high) |
Nifty 50 | -11.80% |
Nifty Next 50 | -20.84% |
Nifty Midcap 150 | -13.43 % |
What's next is anybody's guess?
The solution for the portfolio in markets fall is simple - asset allocation.
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