Nifty 50 turns green in YTD; Will the bull run continue? Anand Rathi explains

Stock market today: The Indian stock market experienced a strong rally from its recent lows, as the benchmark indices, Sensex and Nifty 50, continued their upward momentum for the seventh straight session on Tuesday.

The BSE Sensex opened positively at 78,296 and reached an intraday high of 78,741. With strong early gains, the Sensex turned positive on a year-to-date (YTD) basis, surpassing 78,139, its closing level on December 31, 2024. Similarly, the Nifty 50 index saw a gap-up opening, hitting a high of 23,869. However, both benchmark indices struggled to hold onto their gains and soon faced selling pressure.

What does previous market decline trends suggest?

Looking at the history, the Nifty50 has undergone corrections annually, with declines varying from around 4 per cent to as much as 60 per cent.

According to Anand Rathi report, in the last 18-20 years, 63 per cent of these corrections were up to 15 per cent, and 26 per cent ranged between 15 per cent and 30 per cent. Significant declines of around 30-60 per cent occurred during black swan events like the Global Financial Crisis (GFC) and Covid.

“On a positive note, the Nifty50 typically rebounded to new highs within three months following corrections of up to 15%, and within eight to nine months following corrections between 15% and 30%,” the brokerage firm said in its report.

Will the bull runs continue in the Indian stock market?

The brokerage firm further said that the index is currently in correction mode. Broader equity markets have corrected sharply over the last five months due to geopolitical concerns, GDP growth slowdown, earnings downgrade, slower-than-expected recovery, stretched valuations and foreign liquidity reversal, etc.

According to the data, Nifty50 so far saw a 10.9 per cent correction, since the last peak of 26,216 in September 2024. Meanwhile, Midcap150 and Smallcap250 indices saw higher corrections of 14.6 per cent and 18.2 per cent over the same period.

“We believe, Nifty50 could bounce back over the next three months given the earning degrowth is not as bad as it looks. This coupled with improvement in macros in the post-election year, would drive the broader market performance,” the firm added.

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