India’s Bear Market: A local problem with limited ammo, warns Shankar Sharma

Indian stock market is grappling with a ‘homegrown bear market’, and the tools at policymakers’ disposal seem inadequate to engineer a swift recovery, ace investor Shankar Sharma has warned.

In a recent post on X (formerly Twitter), Sharma drew parallels between the current downturn and past bear markets, highlighting that while India has faced four major crashes since 1990, only one — post-Harshad Mehta scam — was a local problem. The rest were global events where coordinated central bank (CB) interventions led to faster rebounds.

“We have had 4 major Bear Markets in India since 1990: ’92: Harshad. 2000: Dotcom. 2008: GFC. 2020: COVID. The market recovered fairly quickly in 3 except in HM mandi. Why? Because that was a local bear market. Others were global, hence, coordinated moves happened by all CBs. HM Mandi lasted ~10 years. Because it was our local problem, so had to be dealt by ourselves,” Sharma wrote in a post on X.

The Harshad Mehta-led stock market crash of 1992 triggered a prolonged downturn, lasting nearly a decade, as it was an India-specific crisis without external monetary support. Unlike the Dotcom Bust (2000), the Global Financial Crisis (2008), and the COVID-19 crash (2020), which saw global central banks act in unison to inject liquidity, the 1992 crash had to be tackled solely through domestic measures.

History Repeats Itself?

Sharma believes the current bear market in India mirrors the Harshad Mehta era downturn, as it is a ‘localized’ phenomenon. This suggests that expecting a quick global-led recovery may not be realistic.

“This current Bear Market we have is 100% local. We need to find our own bullets to come out of this,” Sharma said.

With domestic economic headwinds, subdued corporate earnings, concerns over escalating global trade and tariff war, and ongoing geopolitical concerns, Sharma questions whether India has the right policy ammunition to reverse market sentiment.

He expressed skepticism over the impact of recent government measures, including a 25 basis points (bps) repo rate cut by the Reserve Bank of India (RBI) and a per capita stimulus of ₹800, hinting at their limited firepower.

“And if 0.25% rate cut & Rs. 800/ per Capita stimulus, count as bullets, God save us,” he remarked.

What Lies Ahead?

With the benchmark indices Nifty 50 and Sensex correcting 16% from their record highs, the big question remains — can domestic policies alone rescue the markets? If history is any guide, India may need to dig deep and find stronger economic levers to engineer a turnaround.

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