Stock Market Fall: Nifty may drop another 2,500 points, says Biju Samuel of Elara
Market Outlook: Nifty to Test New Lows?
The Nifty 50 index has already corrected over 16% from its September 2024 peak, and according to Biju Samuel, a prominent market strategist at Elara Capital, the worst may not be over yet. He expects the index to fall another 2,500 points to levels of 20,000 or even below, before finding support at levels of 19,500.
A Bearish Market: The First Wave
Samuel’s warning comes as the Nifty is currently trading at around 22,000, having given up all its opening gains on Monday. The index had opened higher, but persistent FII selling and uncertainties surrounding the US President’s tariff imposition starting March 4 led to a 3% fall last week. "We are five months in as of now," Samuel said in an interaction with CNBC-TV18, adding, "This is currently the first wave of the bear market, and this may continue for 18-24 months."
A Likely Extension of the Downtrend
The Nifty 50 index has already breached its June 4 low of 21,281, which was the day the Lok Sabha election results were declared. The index had rallied nearly 5,000 points from there to make a record high in September. "We expect the Nifty to fall below that level and potentially test new lows before finding support," Samuel stated. This would be a significant reversal from the 5,000-point rally the index saw in just three months.
A Long-Term Safe Haven: IT Sector
On the flip side, Samuel expects the US bull market to remain intact and sees a turnaround from last week’s fall on Wall Street. He believes India, which has been an outperformer for the last four years, could go on to underperform the global equity markets. However, he identifies the IT sector as a long-term safe haven, citing strength in the US market as a factor behind the potential outperformance of IT stocks going forward. The Nifty IT index is currently down 19% from its peak, which it hit on December 13 last year.
A Conundrum for Investors
While Samuel’s warning may be concerning for some investors, it is essential to consider the potential opportunities that emerge during a bear market. "Investors should focus on quality, rather than trying to time the market," Samuel advised. "The Nifty 50 index will eventually find support at levels of 19,500, but in the interim, investors should be cautious and selective in their investments."
Conclusion: A Tough Road Ahead for the Nifty
In conclusion, Biju Samuel’s warning highlights the potential risks in the Indian equity market, particularly for the Nifty 50 index. While the IT sector may be a long-term safe haven, investors should be cautious and selective in their investments. As Samuel warned, the worst may not be over yet, and the Nifty may still have a long way to go before finding support. As the market navigates these challenging times, it is crucial to remain informed and stay ahead of the curve.
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