Everything was going well in the market. Amidst the ups and downs, Indian retail investors were making decent profits from the stock market. Then suddenly at the end of September, selling started in the market and the speed of this selling was such that in the next one month, Nifty fell by 10% from its all-time high of 26,277 on September 27. Experts are talking about further fall of 10 percent. That means Nifty can soon reach the level of 21,300. Now the question is why so? How long will this decline continue? When had this happened before in the market? How did the market react then? Will understand everything in detail.
Jai Bala of CashTheChaos.com says in an ET report that by the end of the year, I expect the Nifty to reach around 21,300 and the banking index to reach around 42,000, with a stoppage between 49,000 and 47,000. A similar situation can be seen in Sensex also. In the last trading session, Nifty had broken its 200-DMA in intraday trading and reached a 5-month low of around 23,500 points. FIIs have pulled out a record Rs 1.2 lakh crore from Dalal Street since the Nifty peaked in September as ratings were downgraded due to weak second quarter results.
Lawrence Balenko of CLSA believes that India's relative underperformance may continue and possibly remain the same till the first quarter of 2025. He said that it may take 6-12 months to identify any clear pattern. Nifty seems to be getting downside support at 22,800. There are no major signs of breakout in Nifty at present and any major upside seems limited.
As the market continues its downward trend, market experts are reminding traders that the old adage says one should not try to catch a falling knife. He says you weather the storm by staying out of the market, this way you power your returns and the markets generate additional alpha when you are in cash. He says that at such a time, retail investors should be patient, raise more cash and take entry at a right time according to long term.
On the last two occasions when Nifty fell 10% from its all-time high. This is about September 2022 and March 2023. Then the index soon bounced back. Currently Nifty is trading in the support range of June 2022. It is getting support around 200 moving average. If you check its Relative Strength Index on the chart, it is also showing movement in the range of 40-60, which is pointing towards a decline considering the trend.
