The Nifty has declined by 5.05 per cent net in this financial year. On March 31, 2025, it closed at 23519.35, and today it ended at 22331.40, a net decline of 1187.95 points. During this month, the index registered its worst decline of 2847.25 points or 11.31 per cent. On the financial year-end day and the monthly expiry day, it is down by 488.20 points, or 2.14 per cent. The highest volume was recorded after 26 August 2025. It registered a fresh distribution day. The year-end tax harvesting and the expiry trades dragged the market mostly today. The FIIs sold Rs. 1,22,540.41 crore, the highest ever monthly selling.
The Nifty is now just less than 600 points away from the April 2025 low. Now the Nifty is decisively below the 175-week average. The 200 Week average (21741) and the previous low of 21743 are at the same level. Expect this level to act as support for now. The Anchored VWAP support (21778) is also at the same level. Expect this confluence of support to hold.
The Nifty has registered the sharpest time-wise correction and the third-largest price-wise correction, after the March 2020. The biggest worry is the distribution. A spurt in volumes on a sharp decline is higher after the Covid crash. In any case, the Nifty closes below the prior low (21743), with an added distribution day, it will register a double-top pattern breakdown, which means, open for a larger correction of at least 25 per cent from the recent top. The level of this probable correction is at 19784. This probability is higher because the benchmark has not corrected more than 18 per cent since March 2020(was 39.58 per cent). All the corrections were limited to 10 – 18 per cent. This downside correction looks scary. As uncertainties loom over global growth, it looks like a reasonable correction.
The 25 per cent correction will open plenty of opportunities to build a wealthy portfolio. No bear market corrections lasted more than two years. The current corrective consolidation is already 18 months old. The next six months are a period of uncertainty. Historically, whenever the benchmark index corrected 25 per cent, the next leg of the bull phase has witnessed a 100 per cent rise. Which means, the next bull market targets are open to anywhere near 39000, and can be achieved in an impulsive mode, like the fall we are seeing.
To get an early clue about the bottom, look for a bottom formation like a flat base, a double bottom, or an ascending base after more than 20 per cent correction. Post Q2 earnings, the momentum may be revisited on the upside. For the next six months, it is the time to be on the sidelines, and research on relative performances, sector rotations, and study the correlations among different asset classes.