Shankar Sharma Predicts Zero Returns for Nifty 50 Over the Next Five Years

Veteran Investor Warns of a Prolonged Slowdown in Indian Stock Markets

At the Global Wealth Summit 2025 in Mumbai, renowned investor Shankar Sharma delivered a bearish outlook for the Indian stock market, particularly the Nifty 50 index. Sharma asserted that from its September 2024 highs, the benchmark index is expected to generate zero returns over the next four to five years.

“The markets will keep you interested for the next five years,” he said, implying that while the market may continue to see volatility, investors should not expect substantial gains.

This cautious stance marks a significant shift in Sharma’s market outlook. He admitted that while he had previously been a “table-thumping bull” on small-cap stocks, he changed his view in 2023 as market conditions evolved.

Bull Market Nearing Exhaustion: Sharma’s Five-Year Shelf Life Theory

Shankar Sharma highlighted an important cycle theory, suggesting that bull markets in India tend to last for five years.

• “The bull market is in the fifth year. The Indian market has a shelf life of five years.”
• “If the bull has run very fast, like in the case of our small caps, that bull is a tired bull which falls at the slightest trouble.”

He added that while he remained bullish for nearly four and a half years, he attempted to exit most of his investments in July 2024, when markets recorded strong gains. However, he noted that some of his investments were “unexitable.”

Looking ahead, he remarked, “I am hoping for a bull market in 2030,” indicating that a meaningful rally could take several years to materialize.

Large-Caps Will Decline Gradually, Not Crash Like Small-Caps

Sharma also shared insights on the differing behavior of large-cap and small-cap stocks during market downturns.

• “Large caps don’t fall 50%. They rather slow down.”
• “The grind is going to be different. Large caps will drift down and bring correction in overvaluation.”

While small-cap stocks have experienced significant corrections, he believes that large-cap stocks will undergo a more gradual decline, characterized by persistent downward drift rather than steep crashes.

The ‘Lake Return Theory’: Indian Markets Have Hit Their Limit

Shankar Sharma introduced an interesting analogy to explain why he believes Indian equity markets have exhausted their growth potential in the near term.

“Every asset class has a finite amount of reserves in terms of returns. The Indian lake has a capacity of 10-12%. After COVID, the lake shot up, the dam was ready to burst. Now the lake is overflowing and will dry up.”

This “Lake Return Theory” suggests that post-pandemic liquidity and exuberance pushed markets beyond their sustainable return levels, and now a prolonged period of stagnation or decline is likely.

“The Real Bear Market Is Only in India,” Says Sharma

According to Sharma, India is currently facing a bear market unlike any other major economy.

• He pointed out that while global markets are witnessing some corrections, the impact in India is particularly severe.
• The small-cap segment has been hit hardest, which he believes has accentuated the market downturn.

“The real bear market is only in India,” Sharma declared, emphasizing that the Indian market is set for a long period of underperformance compared to global peers.

Market Implications: What Should Investors Do?

With Sharma’s bearish forecast, investors may need to reassess their strategies for the coming years. Some key takeaways include:

1. Expect muted returns from Nifty 50 for the next five years, meaning passive investing in index funds may not be rewarding.
2. Small-cap stocks have already peaked, and their volatility makes them riskier for fresh investments.
3. Large-cap stocks will not crash but will likely see a gradual downward drift, correcting their overvaluation.
4. A new bull market may only emerge by 2030, suggesting a long period of market consolidation or stagnation.
5. Investors should focus on select, high-quality stocks with strong fundamentals rather than chasing market momentum.

A Tough Road Ahead for Indian Markets

Shankar Sharma’s insights at GWS 2025 serve as a strong warning for investors who expect the Indian stock market to continue its bull run. With Nifty 50 expected to deliver zero returns and small-caps facing exhaustion, his message was clear—the real bear market is happening in India. source : Moneycontrol

For investors, this means adjusting expectations, focusing on long-term strategies, and waiting for the right opportunities rather than chasing short-term gains. While the Indian stock market has seen impressive growth in the past, Sharma’s outlook suggests that the next few years may be a time for caution, patience, and selective investing.