March has historically been a strong month for market recoveries, with an average gain of 1.7 per cent since 2009 (excluding 2023), says a report by Axis Securities.

The report highlighted that Nifty has never recorded six consecutive months of decline, suggesting that a potential rebound could be on the horizon.

It said “The Nifty has never recorded six consecutive months of declining prices in history, suggesting a potential rebound”. Indian stock market has been under pressure for the past five months, with the Nifty 50 index witnessing a sharp decline of nearly 16 per cent from its record peak of 26,277 in September 2024.

This marks the sixth-largest drop since the 2008-09 Great Recession and the second-biggest correction since the Covid-led market crash of March 2020. According to report, such prolonged downtrends have been rare in Nifty’s history.

The last time the index saw a similar five-month losing streak was in 1996. Back then, the Nifty had dropped by approximately 26 per cent over five months, followed by an additional 6.6% decline in December before hitting its lowest point.

However, after that, the market witnessed a sharp recovery, surging about 16 per cent from its low point in December 1996 and forming a “piercing line” candlestick pattern. This technical signal led to an impressive eight-month rally of 67 per cent until August 1997.

Akshay Chinchalkar Head of Research and Content, Axis Securities said “The current market environment exhibits signs of excessive pessimism and fear – not without reason – which are often precursors to durable bottoms. While a clear bullish trigger is yet to emerge (this is critical), historical patterns, technical indicators, and sectoral valuations suggest that the market is nearing a medium-term bottom.

Therefore, we would advise investors to allocate some long-term money between 21700 – 22000″.The report also noted that extreme breadth readings–where a large number of stocks are oversold–often occur before a market bottom is formed. However, for a sustained recovery, a strong reversal signal is necessary.

It said “Historical patterns suggest that extreme breadth readings often precede market bottoms, but investors should wait for confirmation of a recovery before taking positions”.

The report says that if the Nifty follows a pattern similar to 1996, investors could see a recovery in March, though the journey might be volatile. In March 1997, for instance, the index dropped 17 per cent from its high to its low before eventually stabilizing and continuing its uptrend.

With past trends and technical indicators in focus, market participants will be watching closely to see if March once again proves to be a turning point for Indian equities.

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