The Nifty 50 index has dipped below its 200-day moving average (DMA) for the first time in 20 months—a signal that many investors watch closely as it often suggests a shift in the market’s short-term direction. The last time the Nifty tested this key technical level was back in February 2022, which sparked a similar wave of cautious sentiment and was followed by a prolonged period of consolidation.
Back in 2022, when the Nifty slipped below its 200-DMA, the market saw a volatile few months. Between February and March of that year, the Nifty plunged nearly 10%, only to surge by 11% within a month. But the rollercoaster didn’t end there. From April to June 2022, the index dropped another 18%, then rebounded strongly with a 22.5% rise over the following months. The Nifty remained below its 200-DMA until March 2023, moving mostly sideways before embarking on a steady upward journey, climbing more than 40% from April 2023 through September 2024.
Now, on November 13, Nifty briefly fell to 23,509—dipping below the 200-DMA of 23,545—before clawing back some ground, though it still closed the session down 1.36%. The last time the Nifty was in this territory was April 2023, and the recent heavy sell-offs, especially from foreign investors, have added pressure. With limited positive news on the horizon, experts say that this volatility could linger.
Nirav Karkera, Head of Research at Fisdom, cautioned investors not to focus too much on the 200-DMA alone, hinting at the possibility of an additional 150-200 point decline. Foreign investors have pulled over Rs 1 lakh crore in October alone, with an additional Rs 26,000 crore already offloaded this month. This wave of foreign selling has led to a weaker sentiment in the domestic market, and although domestic institutional investors (DIIs) have been buying, it hasn’t been enough to offset the impact.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, noted that foreign investors’ steady selling, along with weak global cues, has dampened the mood on the Indian stock market. As of now, 15 out of 19 sectoral indices have fallen more than 10% from their 52-week highs, recorded between August and September, pushing them decisively into correction territory.
The question now is: will retail investors continue to hold their ground, or will they start to retreat
as well?
