Nifty set to face longest losing streak in 28 Years: Should investors be concerned?

The Nifty50 is currently on track for a rare five-month losing streak, something that hasn’t been seen since 1996. If February ends in the negative, it will mark the first time in nearly three decades that the index has faced such a prolonged decline. In fact, this kind of prolonged downturn has only occurred twice in the last 34 years.

So, what’s causing the slump? There are multiple factors at play, both global and domestic, but the most significant one appears to be the ongoing selling pressure from foreign institutional investors (FIIs). Since October 2024, FIIs have pulled out over Rs 2 lakh crore from the market. This, coupled with the rupee’s weakness, Donald Trump’s tariff policies, disappointing Q3 corporate earnings, and a rebound in the Chinese economy, has triggered a sharp sell-off on Dalal Street.

What’s Ahead for Nifty?

The Nifty has fallen over 11% since October 2024, and in February alone, it’s down nearly 3%. Analysts suggest that it could soon dip to levels between 22,500 and 22,400. As long as the index remains below 22,850, traders continue to sell on rallies.

Anand James from Geojit Financial Services warns that if Nifty breaks through levels of 22,580–22,300, more downside could follow. However, if it rises above 22,950, it could signal a potential turnaround.

What Should Retail Investors Do?

For retail investors, experts advise caution. They recommend focusing on high-quality large-cap stocks and buying gradually during the ongoing market correction. Small-cap and mid-cap stocks should be avoided for now due to their volatility.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says, "Even though valuations in the broader market remain high, there are still opportunities in select large-cap stocks."

As the market navigates through these uncertain times, sticking to quality investments may help safeguard portfolios while waiting for a recovery.