Record 2,509 stocks flash red in February 2025 as selloff continues

February is on track to become the worst month for stock declines in India, with 2,509 stocks on the BSE losing value so far — topping the previous record of 2,354 in January this year.

 

The advance-decline ratio (ADR), a key gauge of market breadth, stands at 0.77, only slightly above the pandemic-era low of 0.72 recorded in March 2020. The ratio has remained below 1 for three consecutive months, the longest such stretch since March 2023, signalling persistent market weakness.  

 

The number of stocks undergoing corrections this month is 23 per cent higher than the two-year average of 2,043.

 

The Indian equity markets have been under sustained pressure since late September 2024, as foreign portfolio investors (FPIs) shift capital to China, where equity valuations are more attractive. Subdued corporate earnings in the September and December quarters have further dampened sentiment, while renewed uncertainty in global trade policy following Donald Trump’s return to the US presidency has fuelled volatility.

 

Since taking office, Trump’s aggressive trade stance has rattled investors, pushing them toward US safe-haven assets. Rising US bond yields and a stronger dollar have exacerbated outflows from Indian equities. 

 

The outperformance of stocks in the US has also diminished the appeal of India’s relatively expensive market.

 

In 2025 alone, FPIs have sold Indian equities worth ₹1.1 trillion. The ongoing selloff has wiped ₹45.5 trillion off the total market capitalisation of BSE-listed stocks, bringing it down to ₹396.5 trillion.

 

Despite the correction, analysts warn that valuations in certain pockets of the market remain stretched.  “We remain cautious on small and midcap stocks due to expensive valuations. Even after the recent pullback, we don't believe they have corrected enough,” said Pratik Gupta, CEO and co-head of Institutional Equities at Kotak Securities.

 

Market experts anticipate continued selling pressure until global trade tensions ease. A weaker American dollar — potentially boosting flows into emerging-market funds — and a faster-than-expected pickup in private capital expenditure in India could support a recovery.

 

Still, some analysts expect selective buying in certain sectors from the next financial year.

 

The selloff is likely to continue until the end of March, as many investors tend to book losses to reduce their capital gains tax burden at the close of the financial year,” said Chokkalingam G, founder of Equinomics.