NEW DELHI: India’s equity market could witness a rebound this week, as historical data suggests that markets often recover after a steep selling streak.
Domestic brokerage firm Samco Securities noted that there is an 88% probability of a rebound this week. However, global factors, particularly US President Donald Trump’s tariff policy and persistent selling by foreign institutional investors (FIIs), may keep bearish sentiment dominant.
“Historically, after a prolonged losing streak, Nifty 50 tends to recover in the following weeks. The average 1-week forward return is 1.6%, indicating a short-term rebound. Larger declines, such as the -8.19% drop in March 2020, led to extended weakness, with Nifty falling -6.1% in the subsequent week and -31.6% over three weeks.”
“However, most other corrections resulted in a positive return in the following weeks. As of 13 February, 2025, Nifty 50 has undergone a 7-day declining streak with a cumulative fall of -2.98%. Based on historical patterns, the index may have a probability of rebounding over the next few weeks,” said Samco Securities.
In recent instances, when the Nifty 50 index declined by 4.21% after falling for seven sessions between November 7 and November 18, 2024, it rebounded sharply the following week. Its one-week forward return was 3.3%, and the three-week forward return was 5%.
Similarly, an 8-day losing streak in February 2023 resulted in a 4.21% drop in the index, followed by a 2.6% rally the next week. In 2022, the Nifty 50 registered a 7-day falling streak twice, with the index dropping 6.37% in February 2022 and 5.60% in September 2022. The index then recovered 1.5% and 3.1%, respectively, in the following week.
On February 14, 2025, the BSE Sensex and NSE Nifty closed in the red for the eighth consecutive session, with the Sensex dropping 199.76 points to 75,939.21 and the Nifty falling 102.15 points to 22,929.25. The decline has been more pronounced in midcap and smallcap segments.
The sell-off in the Indian equity market, which began as FIIs shifted focus to other emerging markets like China and Japan, has been worsened by global headwinds and domestic challenges. Slowing economic growth, weak corporate earnings, and stretched valuations have prompted investors, particularly FIIs, to exit Indian equities. Total FII selling in the cash market has now reached R105,145 crore in 2025.
Vinod Nair, Head of Research at Geojit Financial Services said that uncertainty surrounding Trump’s economic policies and high valuations may impact the stock market in the short term, especially in emerging markets. Nair believes that the market is now in the final phase of consolidation.
“With the broad market having corrected by 14%, the downside appears limited, supported by strong long-term economic fundamentals. India’s GDP growth is projected to increase from 6.4% in FY25 to 7.0% in FY26, if the earnings growth reverts to the long-term average of 15% in FY26, we can expect the market to move out of the negative trend,” he said.
Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors said that the recent shifts in global policies, especially those emerging from the US, are invoking a sense of uncertainty among FIIs which in turn is reshaping their investment strategies in dynamic markets like India.