Billion-Dollar Stocks Plunge by Up to 71%: Market Panic or Buying Opportunity?
The Indian stock market is experiencing a brutal selloff, with some of the country’s most valuable stocks plummeting by as much as 71% from their peaks. The sharp correction has raised a pressing question for investors: Is this the time to be greedy or fearful?
While macro uncertainties, tariff risks, and overvalued earnings expectations have contributed to the downturn, seasoned investors recognize that periods of extreme volatility often present rare wealth-building opportunities.
What’s Driving the Market Carnage?
1. Trump’s Tariff Threats & Global Trade Uncertainty
A major trigger for the recent market correction has been Donald Trump’s renewed focus on “reciprocal tariffs”—a move that could impact India’s export-driven industries such as IT services, pharmaceuticals, and auto manufacturing.
Trade war fears: Higher U.S. tariffs on Indian goods could squeeze corporate earnings, prompting foreign investors to reallocate capital to safer markets. Rupee volatility: A weakening rupee further compounds risks for companies reliant on imports, raising cost pressures. Stock impact: IT majors such as Infosys, TCS, and Wipro have faced selling pressure, as Trump’s trade policies remain a looming risk.
2. Market Valuations Finally Catching Up to Reality
India’s benchmark indices—Sensex and Nifty 50—rallied to record highs over the past year, fueled by strong corporate earnings, foreign inflows, and investor optimism. However, some stocks became excessively overvalued, making them vulnerable to corrections.
Earnings mismatch: Many high-growth stocks were trading at exorbitant price-to-earnings (P/E) ratios, leading to a valuation correction as fundamentals caught up. Sector rotation: Investors are shifting focus from expensive growth stocks to defensive and value-driven opportunities.
The selloff is particularly severe in mid-cap and small-cap stocks, where speculative interest had driven unsustainable price levels.
3. SN Naren’s Warning: Market Correction Was Inevitable
Veteran investor S Naren, CIO of ICICI Prudential AMC, recently warned that excessive optimism and momentum-driven investing had pushed valuations to unrealistic levels.
His contrarian view: “It’s time for caution, not euphoria,” he advised, weeks before the selloff began. Long-term investing outlook: Naren remains bullish on select value stocks but has urged investors to avoid chasing overvalued companies.
His warning has added to the cautious sentiment among institutional investors, many of whom are taking a defensive approach amid market volatility.
Which Stocks Have Been Hit the Hardest?
Some of India’s largest and most celebrated stocks have suffered steep declines, wiping billions in market capitalization.
Top Stocks That Have Crashed from Their Peaks:
| Stock | Peak Price (₹) | Current Price (₹) | % Drop from Peak |
|---|---|---|---|
| Zomato | 152.00 | 85.00 | -44.1% |
| Nykaa | 398.00 | 164.50 | -58.7% |
| Paytm | 1,961.00 | 675.00 | -65.5% |
| Adani Total Gas | 4,000.00 | 1,155.00 | -71.1% |
| Tata Technologies | 1,400.00 | 840.00 | -40.0% |
These sharp declines reflect a combination of profit-taking, sectoral rotation, and concerns over company fundamentals.
Time to Be Greedy or Fearful? Investment Strategies Amid the Selloff
With steep corrections across high-growth sectors, the question for investors is whether to buy the dip or stay on the sidelines.
1. Long-Term Investors: Opportunity to Accumulate
Value buying: Corrections create buying opportunities in high-quality stocks with strong fundamentals. Focus on earnings visibility: Companies with resilient balance sheets and strong cash flows remain attractive investments. Defensive sectors shine: FMCG, healthcare, and utilities tend to outperform in volatile markets.
Investor Action: Accumulate blue-chip and fundamentally sound mid-cap stocks at lower valuations.
2. Traders & Short-Term Investors: Exercise Caution
Avoid speculative plays: Stocks with weak earnings or high volatility should be avoided. Monitor global cues: Trade decisions should factor in U.S. economic policies, FII flows, and commodity price movements. Set stop losses: Given high market volatility, stop-loss mechanisms help mitigate downside risks.
Investor Action: Stick to high-liquidity stocks and avoid leveraged trades during uncertain conditions.
3. Sectors to Watch: Where to Invest Next?
Sectors That May Outperform in the Coming Months:
Banking & Financials Strong earnings visibility despite short-term volatility. Pharmaceuticals Defensive sector, benefiting from rising global healthcare demand. Infrastructure & Energy Government focus on capital expenditure and green energy projects makes this sector attractive. IT & Digital Economy Long-term structural growth remains intact, but near-term headwinds persist.
Sectors Under Pressure:
New-age tech stocks Companies like Zomato, Paytm, and Nykaa face valuation corrections. Consumer discretionary Rising interest rates could impact demand for luxury and high-ticket items.
