Indian stock market rebounds after record eight-week losing streak

The longest losing streak in 25 years

India's benchmark Nifty 50 index closed lower for eight consecutive weeks — the first such occurrence in 25 years, according to Sudeep Shah, vice president of technical and derivatives research at SBI Securities. Since the decline began on August 16, the Nifty had lost about 8.7% of its value.

On Monday, October 5, the trend reversed. The Nifty gained 133.80 points, or 0.6%, closing at 22,555.75, while the Sensex rose 472.77 points (0.66%) to 72,382.47. Gains were even sharper earlier in the session — at one point the Sensex was up more than 700 points — before easing by the close.

What drove the rebound

The Times of India attributes the rally to softer-than-expected US jobs data, which reduced expectations of a Federal Reserve rate hike, along with easing crude oil prices. The Economic Times highlights other factors — Accenture's better-than-expected results and the appointment of Anup Bagchi as CEO of HDFC Bank — cited by V K Vijayakumar, chief investment strategist at Geojit Investments, as key triggers for improved sentiment.

The recovery was broad-based, led by FMCG, energy and banking stocks. ITC was the top gainer on the Nifty, up 5.08%, followed by BSE, TMPV, Shriram Finance and Bajaj Finance. The biggest losers included HCL Tech (-3.31%), along with Max Healthcare, HDFC Bank, Apollo Hospitals and Asian Paints.

An uncertain outlook

Historically, similar prolonged losing streaks have been followed by an average 12-month Nifty return of around 39% (median around 23%), based on six comparable episodes since 1992, according to Shah's data. However, analysts warn that an initial rebound is no guarantee of a durable recovery — after the 2008 losing streak, the Nifty initially gained 9.5% within a month but then fell 22% over the following six months.

As reported by The Economic Times, the index has fallen below its 200-week moving average for the first time since the Covid-19 crash, and if the Nifty stays below 22,600, there is a strong chance it could test the 20,500 level. The same source notes that foreign institutional investors sold ₹43,687 crore worth of Indian equities over six trading sessions, and the Reserve Bank of India is widely expected to raise interest rates by 25 basis points on October 7.

Risks remain

Both sources agree that elevated crude prices, high US bond yields, continued foreign investor selling, and a weak rupee (trading above 96 per US dollar) continue to weigh on the market. Ajit Mishra of Religare Broking said the market is merely "taking a breather" from its recent correction, while the broader trend remains weak.