Explained: Can March Save Nifty from Further Slump?

Nifty 50 saw its sharpest decline for the fifth consecutive month, losing over 15% from its September-high peak. Investor uncertainty can be attributed to weak Q3 earnings, heightened FII outflows, and uncertainty over the US’s tariff measures.

As of now, Inventors have lost close to ₹85 trillion (approximately $1 trillion).

Foreign investors have dumped Indian equities worth $25 billion since the September-end, of which $4.1 billion alone came in February. Though investments from domestic institutional investors have provided some cushion, inflows have remained muted. Pratik Gupta, CEO of Kotak Institutional Equities said in a Reuters report, “Most local mutual funds, insurance, and portfolio management funds are seeing a slowdown in their equity inflows.”

While highlighting “India will remain a sell-on-rise market for a few more months,” Mahesh Patil, CIO at Aditya Birla Sun Life Asset Management expects the Indian market to remain under pressure amid U.S. tariff uncertainty. He added that temporary rebounds may occur due to oversold conditions.

Small- and mid-cap stocks came under intense pressure amid the market’s downturn. In February, Nifty Small-Cap 100 and Mid-Cap 100 indices tumbled down by 13.2% and 11.3%, respectively. Inventors have diverted their inflows towards large-cap equity funds and balanced debt-equity funds.

Is there a glimmer of hope in March?

Historically, March has turned out to be positive for the Nifty in seven of the last ten years. The 50-share barometer has ended in green during March in 2016, 2017, 2019, 2021, 2022, 2023, and 2024, while it reported losses in 2015, 2018, and 2020.

JM Financial showcases March as a positive month for the street, but technical analysis shows that a mere change in season may not wean off the five-month downward trend. Osho Krishnan, Senior Analyst at Angel One said, “It will take more than a March seasonality to help Nifty beat the five-month falling trend.”

Notably, Nifty’s biggest March rally came in 2016, when the index gained by 11%, buoyed by strong FII inflows. This was followed by gains in 2022 (4%) and 2017 (3.3%). The sharpest fall was reported in March 2020, when Nifty tumbled by 23% due to the COVID-19 lockdown.

Though, historical trends show investors rooting for recovery in March, analysts have warned that without positive global cues weakness may still persist in Nifty. On February 28, Nifty closed by 420.35 points (-1.86%) at 22,124.70.