Excessive-flying Nifty Junior index slumps to 9-month low on valuation jitters; Zomato leads losers

Indian Inventory Market: The as soon as high-flying Indian shares, which seemingly rallied with no upside restrict, are actually sliding as buyers reassess valuations amid market headwinds. From blue-chip to small-cap shares, all are bearing the brunt of the latest sell-off, with nowhere to cover from the downturn.

Notably, Indian markets have been experiencing relentless promoting strain in 2025, in comparison with their international friends, as excessive valuations coupled with slowing earnings progress have raised issues.

The markets have seen a large rally post-COVID-19, with no main pullbacks, which elevated valuations to excessive ranges. To justify these excessive valuations, earnings progress wanted to be exceptionally sturdy.

Nonetheless, with indicators of a slowing Indian economic system, disappointing outcomes throughout a number of sectors, and a shift in international danger urge for food, buyers are actually reassessing their positions, resulting in a broad-based correction, notably in overvalued segments equivalent to mid- and small-cap counters, as markets alter to extra sensible expectations.

Nifty Junior’s worst month since 2020

Amid this backdrop, the Nifty 50 has corrected almost 12% from its September peak, whereas the Nifty 50 Junior (Nifty Subsequent 50), representing the next tier of liquid securities after the Nifty 50, has witnessed much more strain throughout the latest correction.

The index has tumbled almost 10.4% in January to date to hit a 9-month low. That is additionally marking its largest month-to-month drop for the reason that March 2020 crash of 20.26%, highlighting the shift in investor sentiment towards safer belongings. From its September peak of 77,918, the index has declined 22%, presently buying and selling at 60,912.

Over the past 5 years, the index has surged 118%, ending 4 out of these 5 calendar years in constructive territory.

Commenting on latest market developments, Dr. V Ok Vijayakumar, Chief Funding Strategist, Geojit Monetary Providers, mentioned, “YTD Nifty is down 3.3%, whereas Nifty Midcap is down 9.1%, and Nifty Small Cap is down 14.71%. The takeaway from this necessary information is that valuations are reverting to the imply. This pattern will make the market wholesome and is more likely to proceed. Correction within the overvalued broader market is fascinating.”

“The restoration available in the market witnessed yesterday can proceed with resilience in pretty priced financials. Nonetheless, a pointy rally is unlikely since FIIs will promote at increased ranges. The market shall be wanting ahead to constructive cues within the price range. The Fed determination right this moment is unlikely to affect the market since no change in coverage is predicted from this assembly,” he added.

High Nifty 50 Junior index losers

Solely eight shares within the Nifty 50 Junior index are presently buying and selling within the inexperienced zone this month, whereas the remainder are buying and selling within the pink, with 18 shares sliding within the vary of 10% to 26%.

As seen prior to now, corporations that reported earnings under road estimates are going through extreme selloffs on Dalal Avenue, inflicting their shares to commerce at multi-month lows. Moreover, weak administration commentary post-results is additional weighing on sentiments.

Zomato is one such inventory that has corrected 10% in six buying and selling classes following the discharge of the corporate’s Q3 efficiency. This has led to the inventory dropping 26% within the present month to date. Regardless of such a steep drop, the inventory continues to be buying and selling at a PE of 313.

Likewise, JSW Vitality’s inventory tumbled 7% to hit a 10-month low of ₹453 after the corporate reported an over 27% YoY drop in its Q3FY25 consolidated web revenue. Following the weak set of numbers, analysts trimmed the goal multiples for the inventory, resulting in extra promoting strain.

JIO Monetary Providers is the following inventory on the checklist, which noticed a pointy downturn post-modest numbers in Q3. Within the present month, the inventory has misplaced 22% of its worth.

Different shares equivalent to Bosch, Varun Drinks, BHEL, Information Edge, United Spirits, REC, SAIL, HAL, ABB India, Siemens, Tata Energy, DLF, and PFC are all down between 10% and 20% in January to date.

Whereas some corporations reported better-than-expected numbers within the December quarter, the outcomes do not match the wealthy valuations at which the shares are buying and selling, which additionally led to the sharp fall.

Disclaimer: The views and proposals given on this article are these of particular person analysts. These don’t signify the views of Mint. We advise buyers to test with licensed consultants earlier than taking any funding choices.