Will the market rebound by March 31? Here's what experts have to say

Following a steep decline on Dalal Street, investors are anticipating a potential market rebound in March, citing oversold conditions and historical trends. Domestic brokerage firm Axis Securities supports this outlook, highlighting that March has traditionally been a strong recovery month, with the Nifty posting an average gain of 1.7% since 2009—excluding the 2023 anomaly.

According to the brokerage's analysis, the Nifty has never witnessed six straight months of losses, hinting at a possible turnaround. Additionally, historical data suggests that years ending in odd numbers and those following U.S. presidential elections tend to perform well, with the Nifty posting gains 75% and 83% of the time, respectively, delivering median returns of 17.1% and 21%.

Key Technical Indicators Suggest Market Bottom Near

The Nifty has now entered a crucial support zone marked by the 100-week Moving Average Envelope (+/-3%), which has historically cushioned declines—except in extreme cases like the Covid-19 crash. This signals a potential bottoming-out phase.

Furthermore, six out of 11 sectors are currently oversold based on their 14-day RSI, with all sectors trading below their 200-day moving averages. Breadth indicators for the NSE500 index are also at extreme lows, with just 7.6%, 6.2%, and 10.1% of stocks trading above their 50-, 100-, and 200-day moving averages, respectively—levels last seen during the Covid crash.

Sentiment: Fear-Driven Decline or a Buying Opportunity?

Axis Securities notes that the prevailing market sentiment is marked by excessive fear and pessimism—often a precursor to a sustainable recovery. While a definitive bullish trigger is yet to emerge, historical trends, technical indicators, and sectoral valuations suggest that markets may be approaching a medium-term bottom.

Investors will be watching closely for any catalysts that could fuel a recovery, as March's track record and technical patterns point toward a potential rebound.

The global trade tensions have escalated, with the United States imposing significant tariffs on key trading partners such as China, Canada, and Mexico. This development has introduced substantial uncertainty into global markets, prompting concerns about the potential impact on India's economy and stock market.​

Sensex Performance Since September 2024

In September 2024, the BSE Sensex reached an all-time high of 85,978.25. However, since then, the index has experienced a notable decline:​

Trading Economics

October 2024: The Sensex faced a significant drop, primarily due to disappointing earnings reports influenced by reduced government spending, excessive rainfall, and rising inflation. ​

January 2025: The index was on track for its longest monthly losing streak in over 23 years, with a 3% decline in January, marking an 11.7% decrease from its September peak. ​

March 10, 2025: The Sensex showed a modest rise of 0.39% to 74,618.54, aided by gains in financial services and metal stocks. ​

Expert Insights on Market Recovery

G Chokkalingam, Founder & MD of Equinomics Research, offers a cautiously optimistic perspective on the Indian stock market's trajectory amidst the ongoing trade war:​

Overreaction to Trade War: He suggests that while India cannot remain entirely insulated from global turmoil, the domestic market may have overreacted to the trade war developments.​

Historical Context: Chokkalingam notes that historically, the U.S. has struggled to sustain prolonged trade wars beyond 6 to 12 months due to adverse effects on its own economy, such as slowing consumer spending and increased input costs for small businesses.​

Falling Oil Prices: A decline in global crude oil prices, currently down 22% from recent highs, could benefit India by reducing import costs, potentially saving the country approximately $28 billion.​

Distinction Between Stocks: He emphasizes differentiating between fundamentally strong stocks and overvalued mid-cap and small-cap stocks. Quality stocks that have already corrected by 20% to 50% could be poised for a sharp recovery.​

Positive Indicators: Factors such as better-than-expected Q3 GDP growth, robust corporate earnings, record crop output, and double-digit credit growth in the banking sector support a potential market rebound.​

Risks to Recovery

Despite the optimistic outlook, certain risks could delay market recovery:

U.S. Economic Stance: A tougher economic stance by the U.S. against India could negatively impact the market.​

Monsoon Performance: A weak monsoon season could adversely affect agricultural output and, consequently, the economy.​

Chokkalingam remains confident that the market will stabilize by March-end or early April, with quality stocks leading the rebound.​

Investor Guidance

Investors are advised to exercise caution and focus on fundamentally strong stocks. While some overvalued stocks may continue to decline, quality stocks that have undergone significant corrections present potential investment opportunities. Monitoring global trade developments, domestic economic indicators, and sector-specific trends will be crucial in making informed investment decisions.​