CNBC's Inside India newsletter: Stocks have 'bottomed out.' Here's what 2025 has in store

This report is from this week's CNBC's "Inside India" newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe  here.

The stock market in India hasn't had the best start to this year. Fears of lofty valuation multiples alongside trimmed earnings expectations have led to a steady decline for the Nifty 50.

The index has now re-entered correction territory – a 10% fall – since its most recent high in late September.

In fact, year to date, the benchmark is now in the red. That's hardly out of the ordinary for investors, however. By my count, the Nifty 50 turned negative by the fifth trading day of the year in seven of the past 10 years.

However, this time it's different. Many analysts arrived into the new year raising concerns about elevated valuations and slowing earnings growth at companies.

It's a far cry from the bullish sentiment of yesteryear that the Indian stock market would race ahead of the S&P 500, which rose by more than 20% for the second year in a row.

Equity strategists at HSBC believe the glum mood gripping markets is likely to continue.

"As earnings disappoint – consensus has cut [financial year 2025] growth estimates for the NIFTY 50 from 15% to 5% – investors will likely re-evaluate their positions, limiting market returns," said the bank's Asia Pacific strategists led by Herald van der Linde in a note to clients Thursday. The investment bank downgraded Indian equities to neutral.

Morgan Stanley pointed out that stocks last year, for the first time in eight years, performed worse than bonds and gold (which, to be fair, outperformed most global markets).

"Over the long run, we think