March has saved Nifty before: Will it be enough to end India’s brutal market slump?

Foreign investors have sold $25 billion worth of Indian equities since the end of September, with $4.1 billion exiting in February alone. While domestic institutional investors have provided some support, inflows are slowing.

India’s NSE Nifty 50 saw its fifth consecutive monthly decline, marking its longest losing streak since 1996. The index is now down 15% from its September peak, making India the worst-performing global market. Investors remain cautious as weak earnings, persistent foreign outflows, and U.S. tariff uncertainty continue to weigh on sentiment.

Nearly ₹85 trillion (approximately $1 trillion) in investor wealth has been wiped out in the process.

Foreign investors have sold $25 billion worth of Indian equities since the end of September, with $4.1 billion exiting in February alone. While domestic institutional investors have provided some support, inflows are slowing. “Most local mutual funds, insurance, and portfolio management funds are seeing a slowdown in their equity inflows,” Pratik Gupta, CEO of Kotak Institutional Equities, was quoted as saying in a Reuters report.

Mahesh Patil, CIO at Aditya Birla Sun Life Asset Management, expects continued pressure on Indian markets due to U.S. tariff uncertainty. While temporary rebounds may occur due to oversold conditions, “India will remain a sell-on-rise market for a few more months,” he said.

The downturn has hit small- and mid-cap stocks harder than large caps. In February alone, the Nifty Small-Cap 100 and Mid-Cap 100 indices fell by 13.2% and 11.3%, respectively. From their record highs last year, small-cap and mid-cap indices have now plunged 26% and 22%, respectively. Flows are shifting towards large-cap equity funds and balanced debt-equity funds, signaling investor caution.

“Selling pressure will continue to prevail in small-caps and mid-caps. Investors will stay away and wait and watch; there won’t be strong buying support in the next month or two,” said Patil.

Data from IIFL Securities and Nuvama Alternative & Quantitative Research indicate that high-net-worth individuals (HNIs) and retail investors have cut long positions. While foreign investors have added stock futures, they have also hedged their positions with index shorts, reflecting a lack of confidence in the near-term market trajectory.

Open interest (OI) across Nifty 50 and the broader market has declined, signaling weak conviction heading into March. Analysts expect further downside, with IIFL Securities’ Sriram Velayudhan predicting a drop to 21,800 and Nuvama’s Abhilash Pagaria projecting a trading range of 22,000-22,900 in March.

A glimmer of hope in March?

Despite the bearish outlook, historical trends suggest that March has been a positive month for Nifty in seven of the last ten years. The index has ended March in the green in 2016, 2017, 2019, 2021, 2022, 2023, and 2024, while it recorded losses in 2015, 2018, and 2020.

JM Financial describes March as a month of positive price seasonality for Nifty, but technical analysts warn that seasonality alone may not be enough to reverse the five-month downward trend. “It will take more than a March seasonality to help Nifty beat the five-month falling trend,” said Osho Krishnan, Senior Analyst at Angel One.

Nifty’s failure to close above its previous day’s high for 15 consecutive trading sessions has reinforced a clearly defined bearish trajectory, according to Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities. Unless Nifty breaks the 22,500–22,700 range decisively, it will remain directionless, said Om Mehra, Technical Analyst at SAMCO Securities.

Nifty’s biggest March rally in the last decade came in 2016, with an 11% gain driven by foreign institutional buying. The next highest increases came in 2022 (4%) and 2017 (3.3%). Conversely, the steepest fall was in March 2020, when Nifty lost 23% due to the COVID-19 lockdown. The index also declined in 2015 (-4.6%) and 2018 (-3.6%).

While historical trends favor a market recovery in March, analysts caution that without strong global cues or domestic policy triggers, the ongoing weakness in Nifty may persist. The index closed at 22,124.70, down 420.35 points (-1.86%) on the last trading day of February, marking a difficult start to the new series.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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Foreign investors have sold $25 billion worth of Indian equities since the end of September, with $4.1 billion exiting in February alone. While domestic institutional investors have provided some support, inflows are slowing.

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March has saved Nifty before: Will it be enough to end India’s brutal market slump?

Foreign investors have sold $25 billion worth of Indian equities since the end of September, with $4.1 billion exiting in February alone. While domestic institutional investors have provided some support, inflows are slowing.

Author: admin

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