65 days and counting! Nifty spends longest time below 200-DMA post Covid-19

In the last 25 years, the Nifty spent 64 or more days below its 200-DMA only on 10 instances, shows data. Here's what the past analysis on Nifty's negative trend reveals.

As the National Stock Exchange (NSE) Nifty 50 index quoted around 22,400 levels in opening trades on Wednesday, and in doing so the index is now down for the 65th straight trading session below its long-term 200-day Daily Moving Average (200-DMA). Historical data shows that the Nifty has now spent the longest time below this key moving average since the Covid-19 triggered dramatic collapse.  After registering its new peak at 26,277 in late September 2024, the Nifty dropped below the 200-DMA for the first time on November 14, 2024. The index, thereafter, swung around this long-term moving average for nearly two months.  However, since January 6, 2025, the Nifty has consistently been trading below this long-term moving average - thus clocking 65 straight trading sessions of a negative trend. History shows that during the Covid-19 fall, the Nifty spent a total of 95 trading sessions below the 200-DMA, before conquering the same.  Three years ago, the Nifty quoted below the 200-DMA for 64 days from April 28, 2022 to July 28, 2022. That apart, in the last 25 years there have been only 10 instances, including the present one, wherein the Nifty has languished below the 200-DMA for 64 or more days.    An analysis of the past data shows that the longest-time spent by the Nifty below this key long-term moving average was 227 days - during the period May 6, 2008 till April 13, 2009 - wherein the market downturn was triggered by the subprime mortgage related crisis in the US. Out of the 10 instances, the Nifty spent more than 100 days below the 200-DMA on 5 counts.  That apart, data shows that the maximum downside difference between the Nifty value and its 200-DMA was -45.3 per cent. Meaning, the Nifty quoted almost 45.3 per cent lower compared to its then prevailing 200-DMA. This too took place during the 2008 stock market crash. In comparison during the Covid-19 fall, the maximum downside difference between the 200-DMA and any particular day closing value on the Nifty was -34.1 per cent. Here's a look at the 5 longest negative trends on the Nifty 50 index with the maximum downside differences. 

nifty below 200-DMA

 

  A deeper analysis of the last 9 such longest negative trends, wherein the index spent more than 64 trading sessions below the long-term moving average, shows that the average negative difference between the Nifty and the 200-DMA stood at -21.8 per cent.  At present levels, the Nifty trades at almost 7 per cent discount when compared to its present 200-DMA, which stands at 24,065.    Food for thought: The minimum negative difference between the Nifty and its 200-DMA during the last 9 instances has been 11.3 per cent. In case history repeats itself, and the Nifty extends the fall to match the least downside difference, the index may then trade at around 21,350 levels.  The outlook looks scarier, in case the Nifty were to match the average fall - calculations suggest that the index could potentially drop to levels of around 18,800 in that case.