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.
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.
On April 2, Sensex and Nifty fell to newer lows after US President Donald Trump issued fresh warning to Iran, saying, “We are going to hit them extremely hard over the next two to three weeks.” The benchmarks fell over 2 per cent each, however, during the mid-session, a strong buying pulled the benchmarks in the green zone, recovering all the intraday losses. The recovery, however, came as the rupee strengthened to the 93.20 level after the Reserve Bank of India (RBI) introduced measures to curb speculation.
This kind of intraday reversal, where markets absorb negative news but fail to sustain lower levels, typically suggest that incremental selling pressure is weakening.
However, it may still be too early to call a definitive bottom, as the key drivers behind the sell-off still remain unresolved. 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.
Should You Start Buying The Dip Now
Investors sitting on cash appear eager to buy the dip, but experts say it is better to stay cautious than rush in.
According to Aakash Shah, Technical Research Analyst at Choice Equity Broking, the ongoing correction is largely driven by macro factors and sentiment rather than any structural weakness in the market.
“Markets are in a macro-driven correction near key support zones. Investors should avoid lump-sum buying and instead adopt a staggered accumulation strategy. While the broader trend remains structurally positive, a sustained upside will require confirmation above resistance levels and some easing in global risks,” Shah said.
Shah advises investors to take a measured approach rather than rush in. He suggests avoiding aggressive lump-sum buying and instead investing in a staggered manner, or through systematic investment plans (SIPs) or staggered buying, especially as volatility is likely to remain high in the near term. Shah added that the broader market structure still reflects a correction within a long-term uptrend, rather than the start of a full-fledged bear market. This, he says, gives long-term investors room to selectively accumulate quality stocks near key support levels.
