The Nifty's September 2024 High: Why Prices Later Fell

In September 2024, the Nifty 50 reached a record high. By early March 2025, it had fallen nearly 16 percent.

How could the market look so strong and then lose so much ground? Had the companies suddenly become much worse businesses, or had something changed in what investors were willing to pay for them?

Why investors were buying

Buying a share means owning a small part of a company. Investors may pay more for that ownership if they expect the business to earn more in the future.

In the months leading up to September, several conditions supported that expectation. The Securities and Exchange Board of India (SEBI), India’s securities market regulator, links the market’s rise to strong domestic growth, political stability after the general election, supportive policy, and buying by individual and institutional investors. Institutions here include mutual funds and insurers, which invest money on behalf of their customers.

Overseas investors joined the buying too. A foreign portfolio investorForeign portfolio investorA foreign portfolio investor (FPI) is a registered overseas investor that buys and sells listed Indian securities such as shares and bonds, without taking control of a company. Its net buying or selling is recorded in rupees and can move prices.View topic and related stories (FPI) is an overseas investor registered to invest in Indian securities. After withdrawing money in April and May, FPIs became net buyers of Indian shares in the following months: they bought more than they sold.

The Nifty 50 tracks the share prices of 50 large companies listed on the National Stock Exchange (NSE). Such a stock-market indexStock market indexAn index is a single number that tracks the prices of a chosen group of shares. It is used to describe how a market, or part of it, has moved.View topic and related stories brings the movement of a group of shares into one number. It lets us follow those shares together.

Over the first half of the financial year, ending in September, the Nifty rose 15.6 percent. It reached a record close of 26,216 on 26 September.

But how much were buyers paying for the profits those companies earned?

A good business can still have an expensive share

Imagine a company that earns ₹10 a year for each share. This is its earnings per shareEarnings per shareEarnings per share is a company's profit divided by its number of shares. It is the profit measure that the price-to-earnings ratio compares with the share price.View topic and related stories: annual profit divided by the number of shares. Suppose its share trades at ₹200. A buyer is paying ₹20 for every ₹1 of annual profit.

Now suppose buyers become more hopeful about its growth and the share price rises to ₹240. The company still earns ₹10 per share, but buyers are now paying ₹24 for each ₹1 of profit. The share has become more expensive relative to the same annual profit.

That comparison has a name: the price-to-earnings ratioPrice-to-earnings ratioThe P/E ratio is a share price divided by the company's profit per share. It shows how much investors pay for each rupee of yearly profit, and it is not a payback period.View topic and related stories, or P/E. Divide the share price by earnings per share. In this hypothetical example, the P/E rose from 20 to 24.

Paying more can make sense if profits later grow enough to justify it. But suppose growth disappoints. Buyers may no longer want to pay ₹24 for each rupee of profit. If they are willing to pay only ₹20, the share price falls back to ₹200 even though the company still earns ₹10 per share.

The company does not have to make a loss for its share price to fall. A change in what buyers will pay for its profits can be enough. A fall in this multiple is called a de-ratingRe-ratingA re-rating happens when investors pay a higher or lower price for the same profits because conditions around the business have changed.View topic and related stories.

At the Nifty’s September high, NSE’s combined P/E for the index was 24.38. In other words, investors were paying roughly ₹24 for each ₹1 of annual earnings in NSE’s measure. Whether that was expensive depended on how much they could reasonably expect earnings to grow.

Then the reasons for buying began to weaken

In October, foreign investors switched to heavy selling. SEBI records net FPI selling of ₹94,017 crore in Indian shares that month, the largest monthly outflow on its record.

Why the change? SEBI describes expensive Indian valuations and a growing preference among foreign investors for markets they considered cheaper. It also points to rising Chinese shares, trade tensions, slower profit growth and slower economic growth as factors surrounding the wider decline. The report does not measure how much of the fall each pressure caused.

Think back to the company earning ₹10 per share. If investors have paid a high price expecting growth, weaker growth makes that price harder to justify. They may want to sell, while new buyers may only be willing to enter at a lower price.

The Nifty fell 6.2 percent during October. Indian institutions continued buying even as foreign investors sold. Their net buying reached a record ₹6 lakh crore across the financial year. That provided demand, but buyers and sellers were trading at prices below the September high.

The fall continued over the following months. By early March, the Nifty was about 15.8 percent below its September record. NSE’s P/E had fallen to 19.63, or roughly ₹20 for each ₹1 of annual earnings. Investors were paying less for each rupee of earnings than at the peak. This comparison does not tell us exactly how the underlying companies’ profits changed.

What the fall meant for an Indian investor

A Nifty 50 index fundIndex fundAn index fund holds the shares in an index, such as the Nifty 50, in similar proportions. Its value rises and falls roughly with the index, less the fund's costs.View topic and related stories aims to follow the index. So a fall in the Nifty affects the value of an investment in such a fund. The exact return also depends on fund costs and dividendsDividendA dividend is a share of a company's profit paid to shareholders. It is decided by the company and is not guaranteed.View topic and related stories, money companies distribute to shareholders. The Nifty levels used here measure share-price changes and leave out dividends; that is the distinction between price return and total returnTotal return versus price returnPrice return counts only the change in an index or share price. Total return also counts dividends or interest reinvested, so it is higher when payouts are material.View topic and related stories.

Consider a simplified example. Someone puts ₹1,00,000 into an investment that follows the Nifty’s price movement exactly at the September peak. After a 15.8 percent fall, it would be worth about ₹84,200. This illustration leaves out dividends, costs and taxes. A fall from an earlier peak is called a drawdownDrawdownA drawdown is the fall from a previous peak to a later low. It shows how deep the losses went and how long recovery to the old peak took.View topic and related stories.

Would a 15.8 percent gain bring the money back? No. The gain would start from ₹84,200, so it would take about 18.7 percent to recover the ₹15,800 lost. This is why percentage losses and recoveriesPercentage loss and the gain needed to recoverA fall of a given percentage needs a larger percentage rise to return to the starting value. A 50 percent fall needs a 100 percent gain, for example.View topic and related stories are different: the amount used to calculate the percentage has changed.

Someone investing monthly would have a different experience. A systematic investment plan (SIP)SIP and rupee-cost averagingA systematic investment plan (SIP) invests a fixed amount at regular intervals. Because the same rupees buy more units when prices are low and fewer when high, the average cost per unit can differ from the average price.View topic and related stories spreads purchases across dates. As prices fall, the same monthly amount buys more units. But units already bought can still lose value. A SIP does not prevent losses, and comparing a lump sum with monthly investingLump sum versus monthly investingA lump sum invests all the money at the start, while monthly investing adds money over time. Money added later has less time to grow, so the two are not directly comparable.View topic and related stories requires the actual purchase dates and amounts.

The market also recovered some ground during March. It finished the financial year above where it had begun, while remaining below the September peak. Someone who invested at the peak could therefore still be sitting on a loss, despite the positive annual return.

Did the record high mean there was a bubble?

After seeing the decline, it is easy to look back at September and think the peak should have been obvious. But someone watching the record being set did not yet know what would follow. Treating the outcome as if it had been predictable is hindsight biasBacktesting and hindsight biasA backtest replays history to see how a strategy would have done. Choosing the period afterwards flatters the result, and past outcomes do not forecast future ones.View topic and related stories.

A record high only says prices have exceeded their earlier levels. If companies earn more over time, higher prices can be justified. Even a rising P/E may reflect expectations of future growth, though those expectations can prove too optimistic.

Calling a market a bubbleMarket bubbleA bubble is a period when prices rise far above what expected profits seem to support, often followed by a large fall. Whether a price is too high is a judgement made with hindsight.View topic and related stories requires stronger evidence that prices have moved far beyond what companies could reasonably be expected to earn. SEBI described valuations around this episode as stretched and expensive, but did not call the September high a bubble. The later fall alone does not settle that question either.

A share price depends on both the business’s earnings and what investors will pay for them. In the months after the record, concerns about growth and valuations accompanied foreign selling, and the price investors paid for each rupee of earnings fell.

What to remember

• A record high compares today’s prices with past prices. It does not tell us whether those prices are justified by profits.
• Share prices can fall even when a company remains profitable, because buyers become willing to pay less for each rupee of earnings.
• Domestic buying can provide demand while foreign investors sell, without preventing prices from falling.
• The same market can finish a year higher and still leave someone who invested at the peak with a loss.

Sources

Show 4 sources

1. National Stock Exchange of India, “Index closing values and fundamentals, all indices, 26 September 2024 (ind_close_all_26092024.csv)”, daily index file, 2024Accessed 11 Oct 2026 · Supports: Nifty 50 open, high (26,250.90), low, record close (26,216.05), point change, P/E (24.38), P/B and dividend yield on 26 September 2024.
2. National Stock Exchange of India, “Index closing values and fundamentals, all indices”, daily index files for 28-03-2024, 04-06-2024, 30-09-2024, 31-10-2024, 31-12-2024, 04-03-2025 and 28-03-2025 (28-03-2024Accessed 11 Oct 2026 · Supports: Nifty 50 closing levels and NSE index P/E on those dates; lowest close of 22,082.65 on 4 March 2025 among NSE’s daily files checked for 26 September 2024 to 30 April 2025; percentage changes calculated by Vimista from these closes.
3. Securities and Exchange Board of India, “Annual Report 2024-25”, August 2025 (Chapter 1, pp. 5-7; Chapter 2, pp. 25-26; Chapter 4, pp. 56-61)Accessed 11 Oct 2026 · Supports: highest close of 26,216; first-half and second-half index changes; SEBI’s description of conditions and of the October 2024 to February 2025 correction; FPI and DII flows; FPI, mutual fund and individual ownership at March 2025.
4. National Stock Exchange of India, “Nifty 50 Index factsheet (ind_nifty50.pdf)”, as of 30 September 2026Accessed 11 Oct 2026 · Supports: description of the Nifty 50 as a 50-company index computed by the free-float market capitalisation method; price-return series.