This bear market is not like 2008, says Samir Arora

Samir Arora, founder, Helios Capital

Critiquing those that compare the current bear market conditions to that seen in the financial crisis of 2008, market expert and founder of Helios Capital, Samir Arora, shunned the idea for any such comparison.

Arora explained that the current downturn is primarily a valuation-driven correction affecting a select group of companies, without causing fundamental damage to the real economy. In contrast, the 2008 crisis was marked by excessive and wasteful investments, job losses, property price crashes, forced deleveraging, and rising NPAs, making it a far more severe economic downturn.

In a post on X (formerly Twitter), Arora concluded that due to these fundamental differences, the current market phase will take time to stabilise before recovery begins.

Despite Indian markets falling up to 20 percent from record highs, unsettling investors, historical data also aligns with Arora's view and shows that this correction is far from the most severe in the past three decades. Economic downturns, political instability, and global financial crises have, at times, erased over 50 percent of market valuations, proving that Indian markets have weathered far greater turmoil.

Over the past 30 years, the Nifty, Sensex, and Nifty 500 have undergone significant corrections in just eight years, while in the remaining 22 years, they have demonstrated resilience and maintained their long-term upward trajectory.

While the 2008 financial crisis took nearly three years for the Nifty to fully recover, other market downturns have rebounded much faster. Events like the 2013 US Federal Reserve's "taper tantrum," the 2016 demonetization in India, and the 2020 COVID-19 pandemic saw recoveries within a year or less, driven by aggressive policy interventions and economic measures.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.