Can Nifty fall 20% from peak to enter bear phase? Chart check

Analysts believe the market may not enter bear territory for now; instead expect some time-wise correction and sectoral rotation going ahead. Here are the key levels to track.

The National Stock Exchange (NSE) Nifty 50 index tumbled 1.4 per cent or 321 points to a low of 22,224 in intra-day trades on Friday as Trump tariff threats battered global equity markets. The Nifty, thus far, in February has slipped over 5 per cent, and was on the verge of equalling its second longest monthly losing-streak in the 35-year history.  Since its inception in 1990, the Nifty has registered back-to-back monthly loss in 5 or more months only twice, excluding the present fall. The last time Nifty fell for five straight months, was way back in July - November 1996 period.  That apart, more importantly, the Nifty has now tumbled over 15 per cent form its all-time high of 26,277 hit on September 27, 2024. The index is roughly 5.5 per cent shy from correcting 20 per cent from its peak - which in general is considered as entering a bear market phase.  Among broader indices - the Nifty SmallCap index has already entered a bear market territory, while the MidCap index has shed near about 20 per cent in the last five months. Among sectors, Nifty Media, Energy, Realty, Oil & Gas and CPSE indices have declined more than 25 per cent in the same period.    Ajit Mishra believes the Nifty may not enter a bear market owing to the presence of multiple support levels around the 22,000-mark.  "I do not see the Nifty entering bear market, till we decisively break the 22,000-mark. The Nifty may find support in the 21,800 - 22,000 range, wherein multiple support levels exists.” said Ajit Mishra, Senior Vice President of Research at Religare Broking.  The market, however, may witness a time-wise correction, before making any significant recovery, Ajit Mishra added.  Technically, Nifty is on the verge of a monthly close below its 20-MMA (Monthly Moving Average) for the first time since June 2022. The long-term chart shows presence of 100-WMA (Weekly Moving Average) support at 21,850 levels, followed by monthly trend line support at 21,515 levels. A 20 per cent fall from the peak implies a downside target of 21,000 on the Nifty. CLICK HERE FOR THE CHART  The long-term chart, however, shows that sustained trade below 21,515 levels, can trigger a slide towards the 50-MMA, which at present stands at 19,120 levels.    However, given the steep fall in the market, Devarsh Vakil, Head of Prime Research at HDFC Securities rules out the possibility of Nifty directly falling into a bear market territory for now.  "The market has fallen consistently for the last five months and looks oversold; hence we may see some reprieve in the near-term. Going ahead, the market may witness some time-wise correction, and we should see some sectoral rotation" says Devarsh Vakil, Head of Prime Research at HDFC Securities.  He recommends investors should now look at value rather than chase momentum. Among sectors, Devarsh expects stocks in BFSI (Bank & Financial Services Industry) to outperform on the back of some recently announced regulatory support for the sector.  The Reserve Bank of India (RBI) had cut interest rates by 25 basis points (bps) earlier this month, and conducted various OMOs (Open Market Operations). That apart, RBI recently lowered risk weights on lending to NBFCs (non-banking financial companies).