The benchmark Nifty ended June down 4.85% led by decline in metals, pharma and realty sectors and touched a low of 15,183 recently.
Overseas investors remained
in their selling for the ninth straight month in June, logging the second- highest ever selling in a month under the pall of broader macro concerns.
“In the last 20 years, the Nifty has never given more than three consecutive months of negative returns. There have been 10 instances in this period where the index has fallen for three straight months and the average gains in the fourth month have been around 5.4%,” said Sriram Velayudhan, vice president-alternative research at IIFL.
“The market is oversold, so that might act in its favour,” Sriram added.
In the last such instance in 2020 when benchmarks fell for three consecutive months, the Nifty gained 14.7% in April – the fourth month. In January to March 2020, the index had declined 29.43% amid the onset of the coronavirus pandemic.
The Nifty is down 8.75% so far this year and 14.88% from its all-time high of 18,604.45 hit in October last year.
In the near term, the index is expected to rise to 16,000-16,100.
“There is a probability markets will bounce back. Whenever this scenario occurs, markets give some positive action,” said Rajesh Palviya, head of technicals and derivatives at Axis Securities.
“Technically, the Nifty has crossed 20-day moving average and another 200-300 points rally cannot be ruled out,” said Palviya.
