The Indian stock market‘s key indices, the Sensex and Nifty, opened lower on Tuesday, driven down by index heavyweight Reliance Industries and IT stocks.

“The current market climate is characterized by excessive pessimism and fear, which are frequently prelude to long-term bottoms. While a strong positive trigger has yet to surface (which is essential), historical patterns, technical indicators, and sectoral values all point to the market approaching a medium-term bottom,” the firm stated.

The brokerage business advises investors to allocate some long-term funds between 21700 and 22000. “While most of us cannot predict the exact top and bottom, sensible investing is about capitalizing on opportunities, especially when sentiment is so one-sided. “One such opportunity exists right now,” it stated.

“While most of us cannot predict the exact top and bottom, sensible investing is about capitalizing on opportunities, especially when sentiment is so one-sided. “One such opportunity is now,” the paper stated.

Sector valuations are lower than their one-year and five-year norms, indicating that long-term investors may find opportunities.

The Nifty 50 index has fallen by almost 16% from its peak of 26,277 in September 2024, marking the sixth-largest drop since the 2008-2009 Great Recession and the second-largest after the Covid-led slump in March 2020.

This five-month decline, which last occurred in November 1996, has aroused concerns about a possible bear market.

The Nifty has hit a significant support zone outlined by the 100-week Moving Average Envelope (+/- 3%), which has typically limited drops unless during extreme occurrences such as the Covid crisis. This implies that there is a solid foundation nearby.

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

March has historically been a strong month for market recovery, with an average increase of 1.7% since 2009 (excluding the 2023 outlier fall). The Nifty has never seen six consecutive months of dropping prices, indicating a possible rebound.

“We are observing things that almost always occur close to a durable bottom – excessive pessimism, palpable fear, questioning the very rationale of investing in equities even for the long-term and a shift from upside excesses to the downside, not to mention social media memes,” a report from Axis Securities stated.