Are Bears Running Out Of Momentum? Should You Start Buying The Dip Now

After weeks of relentless selling triggered by escalating geopolitical tensions in the Wes Asia, there are early, though fragile, signs that bears may be exhausted, but have not surrendered yet.

Ever since the US–Israel launched a joint military offensive on Iran on February 28, market across the globe, including India, have been under immense pressure. Domestic equity benchmarks Sensex and Nifty have fallen over 11 per cent in just over a month. The broader market has witnessed even deeper correction.

The sell-off has been strong, broad-based and largely sentiment driven.

Crude oil prices jumped over 50 per cent since the Iran war began, and with India importing nearly 88 per cent of its total oil needs, the spike has raised concerns over higher inflation. At the same time, foreign portfolio investors (FPIs) offloaded record Rs 1,17,775 crore from Indian equities in March, and rupee depreciated to a record low of 95.22 against the US dollar, before recovering lately, adding to the overall pressure on equities.

However, market behaviour over the past few sessions suggest that the decline has become less linear as it was during the initial shock phase in early March. Meanwhile, sectors like IT and auto are witnessing occasional value buying after a phase of deep corrections.

However, it may still be too early to call a definitive bottom, as the key drivers behind the sell-off still remain unresolved. US President Donald Trump has been flip-flopping in his handling of the Iran issue, at times issuing warnings of obliterating the country’s energy infrastructure, and at other times talking about holding talks with Iranian leaders to end the war.