Nifty: Nifty’s over 4% falls in a week mostly recovered within 3 months: Study

Mumbai: Investors looking at historical market behaviour to forecast trends in equities may have a reason to cheer. A study by Samco Securities shows whenever Nifty fell more than 4% in a week, it has mostly rebounded over the next three months.

Of the 10 occasions since 2015 (excluding the Covid period), when Nifty declined more than 4% in a week, it has returned 1% to 20% in the subsequent three months.

Mid-cap and small-cap stocks also fell in such periods, tracking the benchmark indices. In the subsequent three months, the mid-cap index rose seven times and fell thrice, while the small-cap index gained six times and declined four times.

Agencies

Analysts said the rebound this time will depend on whether foreigners slow down their selling of Indian stocks or return to India.

“We believe that unlike what is claimed, our markets have not fallen because of the escalation of the Middle East conflict, but because they had run up too far too soon, and their stretched valuations,” said Apurva Sheth, head of research at Samco Securities, in a note. “Healthy corrections, like these, are necessary to keep the bull market intact.”

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