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Key Takeaways
According to Marc Faber, editor of The Gloom, Boom and Doom Report, the Indian markets entered into a bear market, and Indian equities are still expensive despite the price decline. Faber also indicated that the markets could further fall by another 20% from current levels, saying that “My view is that India has initiated a bear market and we will still go lower. I think that the Indian markets can go down another 20 per cent from here.”
Faber mentioned that the last dollar-term peak of the Sensex took place in September 2024. Meanwhile, the rupee has declined since that period, and thus, foreign investors receive negative returns on investments.
According to Faber, despite good economic performance, the Indian market is not cheap enough. He stressed that the rupee had already gone below ₹90 to the dollar and Indian equities yielded a negative return in dollar terms in 2025.
According to IBEF, India currently possesses over 21.6 crore demat accounts as of December 2025, citing SEBI data. Indian individuals, who invest either directly in stocks or in mutual funds, currently hold 18.5% of the ₹425 lakh crore Indian equity market, i.e., 5+ times increase compared to March 2020. A 20% market correction would directly erode the savings of millions of retail investors.
LoansJagat flags a specific risk for loan-funded investors. According to a LoansJagat analysis, personal loan interest rates in India averaged 12.10% as of February 2024. If a ₹10 lakh personal loan investor sees markets fall 20%, their stocks could lose ₹2 lakh while they still owe ₹3.49 lakh in interest over 5 years. This double loss makes borrowing to invest in a falling market extremely dangerous.
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Faber’s warning is backed by a specific concern of earnings disappointment. He told Business Standard, “I think the earnings will begin to disappoint and have a bearing on the market sentiment.” He also noted that global liquidity is still growing, but at a slower rate than before, and this will impact Indian stock markets going ahead. Faber recommends holding higher cash allocations and bonds right now. He also remains positive on gold and silver over the long term.
Not all analysts agree. Several brokerage houses believe the Sensex could gain more than 25% by December 2026. This points to GDP momentum, low inflation, and positive consumer sentiment.
J.P. Morgan noted in September 2025 that MSCI India consensus earnings growth estimates for 2025/26 stand at 13% and 16%, respectively. For investors, the safest near-term step is to avoid leveraged or loan-funded equity positions and review exposure to expensive sectors like AI and tech.
Marc Faber’s 20% correction call is not about India’s economy. It is about valuations, rupee weakness, and slowing global liquidity. With over 21.6 crore demat accounts active in India, a correction of this scale would affect millions. Investors should avoid borrowing to invest, hold some cash, and watch earnings results in the next 2 quarters closely before making fresh equity bets.
According to Marc Faber, the Indian market can still fall by another 20%. Is it time for me to invest or should I wait?
If the valuations remain high and profits are low, then the markets might continue to perform poorly. Instead of making one big investment, it is wise to invest in small quantities.
If the market falls by 20%, will it recover within the next six years?
From past patterns, the Indian markets have always been known to recover after major falls over time. Six years gives enough time for recovery.
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