The Indian equity markets have been experiencing their longest losing streak in two years, but experts are pointing towards a possible rebound on the horizon. Historical data analyzed by SAMCO Securities indicates that the Nifty 50 has seen 17 instances of seven or more consecutive declining sessions since 2012. After such prolonged downturns, the index has historically shown an average positive return of 1.6% in the week following, with returns extending to 1.8% over a one-month period.
On Friday, the benchmark indices, BSE Sensex, and Nifty 50 closed lower for the eighth consecutive session. The Sensex ended at 75,939.21, down 0.26%, while the Nifty 50 fell 0.44% to close at 22,929.25. Siddhesh Mehta, a Research Analyst at SAMCO Securities, highlights that while it’s challenging to predict the exact bottom, historical trends suggest that extended losing streaks often lead to short-term rebounds. Immediate support levels for the Nifty 50 are situated in the 22,600-22,550 zone, with resistance observed at 23,550 and 23,800.
The recent market correction has had a more significant impact on the broader markets compared to the benchmark indices, with the Nifty Small-cap 100 declining by 9.41% and the Nifty Mid-cap 100 by 7.38% over the past week. Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, offers a cautiously optimistic perspective, noting that the markets are likely to remain range-bound in the next two months.
**Market Analysis and Expert Insights**
The market’s behavior is being influenced by global factors, particularly as emerging markets face volatility. Bathini emphasizes that the global market impact will have ripple effects on Indian markets, despite discussions of decoupling. Foreign Portfolio Investors (FPIs) are closely monitoring the market, with long-only funds waiting for fair valuations before investing in India.
Sector-specific impacts have also been observed, with small and mid-cap stocks demonstrating higher volatility. Bathini explains that small and mid-caps are generally perceived as high beta in nature, meaning they tend to exhibit more significant price swings compared to the overall market.
**Technical Indicators and Market Trends**
Technical indicators point towards potential support levels, with Bathini highlighting the significance of the 200-day moving average in triggering strong rebounds. The market’s liquidity plays a crucial role in navigating these levels, providing support during challenging times.
Analysts view the current market scenario as a correction rather than a crash, with the Nifty maintaining a broad trading range between 22,000 and 26,000 over the past 18-24 months. As Q4 results approach and global economic conditions remain uncertain, market participants are closely monitoring various indicators for signs of a potential reversal in the current downward trend.
In conclusion, historical patterns suggest an 88% probability of a market rebound in the coming week, based on SAMCO Securities’ analysis of similar losing streaks since 2012. However, analysts caution that external risks and structural headwinds must not be overlooked in the current market environment.
