Market Poised for Deeper Correction Amid Long-Term Downtrend
The Nifty 50 index may breach its election result day low of 21,300, with key support emerging near 19,500, according to Biju Samuel, Technical Strategist at Elara Capital. He cautioned that the market is in the early stages of a prolonged downtrend, which could persist for at least three quarters.
Since its record high of 26,277.35 on September 27, 2024, the Nifty has dropped 4,152.65 points (15.80%), while the BSE Sensex has declined 12,780.15 points (14.86%) from its peak of 85,978.25 reached on the same day.
“We have been structurally positive on India since the Covid bottom, but towards the end of December and early January, strong evidence started emerging of a shift to a long-term bear market,” Samuel told CNBC-TV18 on March 3.
According to him, the market has already peaked and is now entering a multi-phase downtrend. He sees Nifty testing long-term support near 19,500, where structural supports are in place.
Bear Market Outlook: Climax Selling Could Trigger Recovery
Samuel believes the first leg of a bear market often ends with a selling climax, which could be triggered if Nifty falls below the election low of 21,300.
- If this level breaks, a climactic sell-off could ensue, marking the end of the first bear market swing.
- Midcap and smallcap indices have already fallen below their election result day lows, signaling that Nifty could follow.
- Short-lived support may appear near 21,800, but the 23,000–23,300 range has now turned into a major supply zone, where investors are exiting positions.
The Indian stock market saw sharp declines in June 2024 after initial election results showed the BJP securing fewer seats than projected in exit polls. On June 4, the Sensex plunged 8.15% (6,234 points) to 70,234.43, while the Nifty 50 fell 8.52% (1,982 points) to 21,281.45.
Samuel expects a final wave of panic selling before any meaningful recovery.
“Once a bear market trend is established, a sharp two- to three-day collapse is needed to wipe out support levels before we see a sizable recovery,” he said.
Current Market Performance: Weakness Persists
The Indian equity market continued its downward trajectory:
- Sensex fell 112.16 points (0.15%), closing at 73,085.94 on Monday, after hitting an intraday low of 72,784.54.
- Nifty slipped 5.40 points (0.02%), settling at 22,119.30, after testing a session low of 22,004.70.
This marks the Nifty’s ninth consecutive session of losses.
On Friday, the Sensex had dropped 1,414 points, closing at 73,198.10, while the Nifty tumbled 420 points to 22,124.70.
Highlights: Market in Bearish Territory, Caution Advised
With selling pressure intensifying, analysts believe that a break below 21,300 could trigger a deeper correction towards 19,500. Investors are advised to exercise caution, as bear market conditions may persist in the coming quarters.
