Nifty 50 posts strong 6.3% rally in March after historic 5-month decline

March saw a remarkable rally in India's Nifty 50 index, marking its best performance in 15 months. The benchmark, which had endured a historic five-month losing streak, rebounded with a 6.3% rise in March, leading to a 5.34% gain for the financial year (April-March). The BSE Sensex also saw a 5.1% increase, making a strong comeback after a dip in early March.

Market experts point to several positive factors supporting the rally: expected monetary easing, a reduction in the fiscal deficit to 4.4% by FY26, tax relief driving consumption, and healthier balance sheets in the banking sector. Given these conditions, experts advise investors to focus on fundamentals and avoid knee-jerk reactions in their portfolios. It’s a good time to review external assets and reassess your asset allocation, rather than making sudden changes.

Vaibhav Porwal, Co-Founder of Dezerv, believes that despite market volatility, India’s long-term growth story remains intact. With fiscal reforms underway, investors are encouraged to be disciplined, review asset allocations, and pick assets that align with their risk tolerance. Instead of expecting a broad market rally, FY26 is seen as a year of focused wealth creation, with opportunities lying in specific pockets of the market.

Historical market corrections of 15-20% often lead to a median return of 15% over the next 3 years, making this a favorable time for investors to consider actively managed portfolios. Additionally, SIP (Systematic Investment Plan) discipline is key, as market corrections offer opportunities to buy at lower prices, thus reducing average investment costs.

From a technical standpoint, Nagaraj Shetti, Senior Technical Research Analyst at HDFC Securities, notes that despite an initial recovery, Nifty slipped into weakness and closed lower on the last trading day of the week. The daily chart indicates a possible range-bound movement between 23,650 and 23,400 levels in the short term, with resistance around 23,650 and 23,850.

In summary, while the near-term uptrend of Nifty remains intact, market action suggests consolidation and range-bound movement for the time being. Immediate support is at the 23,400 level (200-day EMA), with resistance levels to watch at 23,650 and 23,850 in the coming week.