Nifty May See Worst January In A Decade

Worries about global politics and trade are pulling the Nifty 50 down. Experts say the market could drop further low.

Illustration: Dominic Xavier/Rediff

The Nifty 50 index has declined 5.5 per cent from its January 5 record high of 26,373.20 and is likely to record its worst performance in a decade this month, data shows.

The index is near its 200-day moving average (200-DMA), slipping 3.7 per cent in January.

Its last record fall, of 4.8 per cent, was in January 2016. If the index continues falling, it will be the third biggest loss in January since 2011 when it had tumbled over 10 per cent, shows data.

Analysts attribute the fall to geopolitical and tariff-related developments.

Geopolitics is redrawing business equations and threatens to affect geographical boundaries, according to analysts at Prabhudas Lilladher.

Global events are causing business uncertainty and volatility, particularly for India, as a sustained tariff dispute with the United States and related developments disturb market momentum, they said. 

“Given the current phase of geopolitical uncertainty, markets are likely to remain cautious,” said Amnish Aggarwal, director for institutional research at PL Capital Group.

“We have seen a huge outperformance by largecaps (16-17 per cent over the last 12 months) over mid/smallcaps, and we don’t expect this trend to change in the near term,” Aggarwal added.

“We value Nifty at 3 per cent discount to 15-year average price-earnings of 18.7x with December 2027 earnings per share of Rs 1,539 and arrive at 12-month target of 28,814 (29,094 earlier).”

Nifty 50 Near 200-DMA Amid Geopolitical Jitters

The Nifty 50 index hit a low of 24,920 in intraday trade on Wednesday, testing the 200-DMA (25,124 levels) for the first time since May 2025.

The 200-DMA is a key technical indicator in identifying the long-term trend of a particular index or a stock.

The trend is said to be positive if prices sustain above the key average, and vice versa.

That apart, one in two Nifty stocks are seen trading below the 200-DMA, including Reliance Industries, HDFC Bank, ICICI Bank, TCS, Hindustan Unilever, ITC, Adani Enterprises, Bajaj Finance, Eternal, ONGC, and InterGlobe Aviation.

Analysts at SAMCO Securities said the fall has hurt investor confidence as the Nifty has slipped below all key short- and medium-term moving averages, including the 20-day, 50-day, and 100-day.

Nifty’s 200-DMA coincides with the 61.8 per cent Fibonacci retracement of the prior up-move, they said.

This confluence of long-term moving average support and Fibonacci retracement, they suggest, makes the 25,100 to 25,000 zone structurally critical for determining the next directional move.

“Daily super-trend has also turned into a major overhead barrier, reinforcing the bearish undertone. Momentum indicators reflect growing downside pressure, with the daily relative strength index slipping sharply toward the 29-30 zone, indicating oversold conditions but not yet showing any meaningful signs of reversal,” said Dhupesh Dhameja, derivatives research analyst at SAMCO Securities.

Nandish Shah, senior derivative and technical research analyst at HDFC Securities, expects a further fall.

He sees the overall trend to remain negative as long as the index remains below 25,500 levels.

“The short-term trend seems bearish, as the Nifty has broken below the 25,500-26,300 range. It is just a matter of time before the Nifty falls below the 200-DMA. It is likely to head lower and could test 24,600 levels, with interim support around the 25,020 mark. This translates into a downside risk of 2.3 per cent from current levels,” Shah said.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

Feature Presentation: Rajesh Alva/Rediff