There are 88 per cent chance of Nifty rebounding next week, this is if history is to go by. Nifty was on the verge of sliding for the eighth straight day on Friday. There are only a few instances when the losing streak hit 8-9 days.
Historically, after a prolonged losing streak, Nifty tends to recover in the following weeks. The average 1-week forward return is 1.6 per cent, indicating a short-term rebound, said Siddhesh Mehta, Research Analyst, SAMCO Securities.
From November 7 to November 18, 2024, Nifty fell 4.21 per cent in the seven-day fall only to rebound 3.3 per cent in the next one week. The 8-day fall in February 2023 resulted in 4.21 per cent drop for the index, which was followed by a week of 2.6 per cent rally. In 2022, Nifty saw spells of 7-day fall twice, with the index falling 6.37 per cent in February 2022 and 5.60 per cent in September 2022. The index recovered 1.5 per cent and 3.1 per cent, respectively, in the next one week.
"Larger declines, such as the 8.19 per cent drop in March 2020, led to extended weakness, with Nifty falling 6.1 per cent in the subsequent week and 31.6 per cent over three weeks. However, most other corrections resulted in a positive return in the following weeks," Mehta said.
He said data spans from 2012 to 2025 offered insights into market behavior after extended downturns.
Nifty had fallen 2.98 per cent in the ongoing 7-day fall. This excludes Friday's movement as the index is yet to close.
Only once in 2019 did the NSE barometer fell for nine straight days. It happened from April 30 to May 13 that year. The index lost 4.2 per cent that year only to rebound 2.2 per cent in the next.
Historically, after a prolonged losing streak, Nifty 50 tends to recover in the following weeks. The average 1-week forward return is 1.6 per cent, indicating a short-term rebound.
Net-net, Nifty delivered 1.6 per cent return in the one-week period, 1.1 per cent average return in two-week, 1.5 per cent average return in 3-week and 1.8 per cent average return in one-month after such a selloff.