New Delhi
A recent report indicates that the Indian stock market is approaching a medium-term bottom, though a clear bullish signal is yet to emerge. According to Axis Securities' India Equities Exclusive Report, "we would advise investors to allocate some long-term money between 21,700-22,000."
The Nifty 50 index has fallen nearly 16% from its September 2024 peak of 26,277, marking the second-largest drop since the COVID-19 crash in March 2020. This prolonged downtrend, last witnessed in 1996, has fueled concerns about a potential bear market. However, valuations across sectors are now below their one-year and five-year averages, presenting opportunities for long-term investors.
Technical indicators also suggest that the market is in a crucial support zone. The Nifty is currently positioned within the 100-week Moving Average Envelope (+/-3%), a range that has historically contained market declines except during major crises like COVID-19.
"Historical patterns suggest that extreme breadth readings often precede market bottoms, but investors should wait for confirmation of a recovery before taking positions," the report stated.
March has been a strong month for market rebounds, with an average gain of 1.7% since 2009. The Nifty has never declined for six straight months in history, suggesting a potential turnaround.
Axis Securities noted that signs of excessive pessimism and fear in the market indicate a durable bottom may be forming, providing an opportunity for prudent investing.
