From Slump to Surge: Why the Market That Fell Isn’t the One That Bounced Back

The market’s trajectory since last September has been nothing short of a rollercoaster ride, going from steep downturn to now soaring closer to record high levels. Between September 2024 and May 2025, the Nifty 50 and Nifty Midcap 150 weathered a complete market cycle, initially plunging 16% and 21% from their peaks, before staging a rebound of 13–17%, respectively, from the lows hit in February and March this year.

With the bounceback in full swing, conversations around valuations have returned, particularly whether they’re inching back towards the levels that triggered the last downfall. Despite trading at higher levels, today’s market, experts say, is not the same beast that fell. Analysts at Elara Capital argue that what’s emerged is a structurally different, and arguably a healthier, market.

“The drawdowns were valuation-led and broad-based; however, the rebound has been rotational, earnings-supported on a selective basis, and anchored in lower-multiple segments. While aggregate valuations are approaching earlier levels, the recovery rests on firmer ground-- less frothy, more diversified, and structurally less risky,” they said.

The market’s trajectory since last September has been nothing short of a rollercoaster ride, going from steep downturn to now soaring closer to record high levels. Between September 2024 and May 2025, the Nifty 50 and Nifty Midcap 150 weathered a complete market cycle, initially plunging 16% and 21% from their peaks, before staging a rebound of 13–17%, respectively, from the lows hit in February and March this year.

With the bounce back in full swing, conversations around valuations have returned, particularly whether they’re inching back towards the levels that triggered the last downfall. Despite trading at higher levels, today’s market, experts say, is not the same beast that fell. Analysts at Elara Capital argue that what’s emerged is a structurally different, and arguably a healthier, market.

“The drawdowns were valuation-led and broad-based, however, the rebound has been rotational, earnings-supported on a selective basis, and anchored in lower-multiple segments. While aggregate valuations are approaching earlier levels, the recovery rests on firmer ground-- less frothy, more diversified, and structurally less risky,” they said.

With the rebound though, the headline price-to-earnings ratio has also inched higher, going from 21x to 23x for the Nifty 50 and 34x to 39x for the Nifty Midcap 150. Firstly, despite the uptick, valuations still remain softer than the 25x and 45x, respectively, seen during the peak in September 2024.

More importantly, it’s not just about how high the numbers are, it’s about what’s behind them. According to Elara, the composition of the market has shifted significantly. At the peak, many of the worst-hit stocks were trading at unsustainably high premiums to their long-term averages. In contrast, the rebound has been powered by names with more realistic valuations and earnings that are actually delivering.

Moreover, valuations today are also better dispersed, with fewer extremes distorting the index. “In our view, the rotation into value-aligned, relatively under-owned sectors has meaningfully reduced concentration risk. With no signs of speculative excess and a more balanced leadership mix, the market appears structurally healthier and well positioned for a low-volatility melt-up, driven by value and quality, until fresh valuation froth emerges,” Elara Capital stated.