MUMBAI: India’s equity market benchmark index, the NSE Nifty50, almost tested the 22,000 level on Monday, hitting an intraday low of 22,004.70. This underscores the potential for further pain for investors in the coming sessions. Over the past five months, the index has breached multiple resistance levels, leaving most experts uncertain whether the selling spree has bottomed out or will persist.
The Nifty50 fell for the ninth consecutive session on Monday, closing at 22,119.30, down 5 points or 0.02 per cent. Similarly, the BSE Sensex ended 112 points or 0.15 per cent lower at 73,085.94.
Axis Securities noted that the current market environment reflects excessive pessimism and fear which often precede durable bottoms.
“While a clear bullish trigger is yet to emerge (this is critical), historical patterns, technical indicators, and sectoral valuations suggest the market is nearing a medium-term bottom. Therefore, we advise investors to allocate some long-term funds between 21,700 and 22,000,” the brokerage said.
It added that the Nifty has entered a critical support zone defined by the 100-week Moving Average Envelope (+/-3%), which has historically contained declines except during extreme events like the Covid crash. This suggests the market is close to forming a durable bottom.
The Nifty50 index has declined by 16% from its September 2024 peak of 26,277, marking the sixth-largest drop since the 2008-2009 recession and the second-largest since the Covid-led crash in March 2020. This five-month downtrend, last seen in November 1996, has raised concerns about a potential bear market.
Bajaj Broking stated that the market remained volatile as global trade concerns weighed on investor sentiment. Continuous foreign selling has exacerbated the decline, with FIIs offloading Rs 58,988 crore worth of Indian equities in February.
“The Nifty has formed a bear candle with long shadows on both sides, indicating intraday volatility. The index continues to make lower highs and lower lows on the daily chart, signaling the ongoing downtrend. Key support levels are at 21,800-21,500, which align with previous major lows, long-term trendline support, and the 100-week EMA,” said analysts at Bajaj Broking.
In the derivatives market, call writers outnumber put sellers, reflecting a cautious stance. The significant open interest build-up at the 22,500-call strike (1.15 crore contracts) marks it as a strong resistance level. Meanwhile, substantial put accumulation at the 22,000 strike (72 lakh contracts) reinforces this level as a reliable support base.