Indian Stock Market Down 14%: Is It Oversold? Experts Weigh In

Mumbai : The Indian stock market has been under significant selling pressure, with the Nifty 50 declining over 14% from its all-time high of 26,277.35, recorded on September 27, 2024. The broader Nifty 500 index has faced an even steeper fall of 17% from its peak.

Indian Stock Market Down 14%: Is It Oversold? Experts Weigh In

Mumbai : The Indian stock market has been under significant selling pressure, with the Nifty 50 declining over 14% from its all-time high of 26,277.35, recorded on September 27, 2024. The broader Nifty 500 index has faced an even steeper fall of 17% from its peak.

A combination of foreign capital outflows, weak corporate earnings, and slowing economic growth has contributed to the market downturn, leading the Nifty 50 to its longest losing streak since 1995.

Is the Market Oversold? Analysts Divided

Market experts remain divided on whether the Indian stock market is oversold or if further corrections are likely.

• Ajit Mishra, SVP of Research at Religare Broking, believes the market is oversold but unable to rebound due to rotational sectoral corrections.

  • “Markets are certainly oversold, but a decisive break below 22,500 in Nifty could extend the decline toward 22,000. To reverse this trend, the index must reclaim and sustain above 23,000.”

• Devarsh Vakil, Head of Prime Research at HDFC Securities, sees signs of improvement in macroeconomic parameters.

  • "Sectoral rotation and time-based corrections are underway. These stocks will likely recover as earnings growth materializes, providing the fundamental catalyst for a rally."

• Abhishek Jain, Head of Research at Arihant Capital Markets, disagrees, arguing that valuations remain stretched despite the correction.

  • “The bull run over the last five years led to excessive valuations. Despite the correction, nearly 60% of Nifty 500 companies are still trading above their five-year PE ratios.”

Which Sectors Could Lead the Next Rally?

Experts suggest that banking, financial services, and insurance (BFSI) could lead the next market uptrend.

• Devarsh Vakil (HDFC Securities) believes BFSI will benefit from post-election capital expenditure and budgetary implementations.

  • "Credit growth should accelerate as the RBI's rate cuts ease borrowing conditions, boosting loan demand. Public sector banks will benefit from National Company Law Tribunal (NCLT) resolutions and provision write-backs."

• Abhishek Jain (Arihant Capital Markets) highlights key sectors with long-term potential:

  • Energy: Growth in power generation, transmission, and renewable energy projects.
  • IT: Indian firms leading the digital transformation and AI adoption.
  • Pharma & FMCG: Rural-focused companies with strong earnings potential.

• Ajit Mishra (Religare Broking) expects banking, financials, metals, energy, and IT to outperform selectively in case of a market rebound.

Outlook: Caution and Sectoral Rotation

With the Nifty 50 in its longest losing streak in nearly three decades, investors are closely watching key support levels and economic indicators. Experts suggest sectoral rotation will play a critical role in market recovery, with BFSI, energy, and IT being key drivers in the next rally.