Markets On The Edge: SEBI RA Varun Bhargav Identifies Seven Warning Signs Of A Potential Crash Ahead

The analyst cautioned that markets are showing signs of exhaustion, with narrowing breadth, high leverage, and rising credit stress all pointing to growing fragility.

Global stock markets could be headed for a major downturn over the next couple of years.

According to a SEBI-registered research analyst Varun Bhargav, there are growing similarities with the dot-com crash of 1999, the global financial crisis in 2008, and the COVID-led selloff in 2020.

Tight Monetary Conditions

The analyst pointed to tightening monetary policy by central banks, especially the U.S. Federal Reserve, as one of the key red flags. After years of easy money, rising interest rates and shrinking liquidity are starting to weigh on asset prices, echoing the lead-up to earlier market collapses.

Excess Leverage

Another major concern is leverage. From margin trading to complex options strategies, Bhargav noted that there’s a growing amount of borrowed money chasing returns, marking a sign that markets are in a euphoric phase. When sentiment shifts, this kind of exposure can trigger sudden, cascading losses.

Technical Indicators

Technically, global indices are forming patterns like double tops and head-and-shoulders, which are historically seen before sharp reversals. At the same time, breadth is thinning, with just a handful of large-cap stocks driving gains while many others lag. That, too, has been a late-cycle signal in previous crashes.

External Triggers

The analyst warned that while the cracks are forming internally, a sudden external shock, including geopolitical, regulatory, or macroeconomic conditions, could tip things over. 

Risks such as U.S.-China tensions, global de-dollarization, or energy supply disruptions were cited as possible triggers.

Valuation Concerns

Valuations also came under scrutiny. Even as growth slows and household savings decline, stock prices remain elevated. The analyst suggested this disconnect from fundamentals resembles bubble-like conditions and may not hold up for long.

Credit Stress

Credit markets are starting to show strain as well, with rising defaults and tighter bank lending — patterns that have previously signaled trouble ahead. 

The analyst said this could lead to weaker corporate spending and a broader economic pullback.

MAG7 Concentration Risk 

Another risk flagged is how much the recent rally depends on just a few names such as the so-called MAG7 tech stocks. If any of them falter, it could rattle the entire market, given their weight in major indices.

Bhargav urged investors to stay cautious by raising cash, avoiding leverage, and keeping a close watch on credit markets and broader economic signals, not just stock charts.

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