Rallies and reversals since 1991: The lessons for Indian investors
Argument
India’s stock market history since 1991 shows the same pattern repeating: stories and easy money drive rallies, then leverage, weak earnings and stretched valuations bring them back down. The piece argues that investors should treat those cycles as a warning to focus on earnings, cash flow, balance-sheet strength and valuation discipline.
Assessment
The four episodes cited point to different triggers, but the same failure mode. Harshad Mehta relied on banking liquidity, the dot-com boom on internet enthusiasm, the 2003-07 rally on a strong investment cycle and the post-Covid surge on abundant liquidity and domestic inflows. In each case, prices ran ahead of what businesses could actually support.
Counterpoints
The article’s advice is broad, but the timing is easier to state than to execute: even good companies can fall sharply when valuations are extreme, and investors still need to decide when a price has become too rich.
The 2025-26 correction is presented as more orderly than earlier busts because domestic SIP flows and contained leverage cushioned selling, but slower earnings and FII outflows still showed how quickly sentiment can shift.