Bullish Signal: Nifty 50 Limited Downside Post-Crash, Elara Sees Rebound

Elara Securities has indicated that the Nifty 50, having experienced an 11% correction in March due to the Iran-US conflict, is likely to see limited further downside. This assessment is based on historical market behavior during conflicts, which typically cap drawdowns around 10%, and current valuations being 7% below long-term averages.

This analysis is significant for Indian market participants as it suggests that the recent sharp correction might be largely priced in. For traders, it implies that the risk-reward for long positions could be improving, signaling a potential bottoming out and subsequent rebound in the broader market, provided geopolitical tensions do not escalate further.

While no specific stocks are named, a potential Nifty rebound would broadly benefit all large-cap and quality mid-cap stocks across sectors. Financials (e.g., HDFCBANK, ICICIBANK), IT (e.g., TCS, INFY), and RIL, which are significant Nifty constituents, would likely see positive momentum. The overall market sentiment would improve, potentially attracting FII inflows.

Traders should monitor the geopolitical situation for any de-escalation signals and track FII flow data for signs of renewed buying interest. Key Nifty support levels should be watched for confirmation of a bottom, and any sustained move above immediate resistance levels would reinforce the bullish outlook. Global crude oil prices will also be a crucial factor.

• •Nifty experienced an 11% crash in March due to Iran-US conflict.
• •Elara Securities sees limited downside for Nifty.
• •Historical data suggests conflicts cap drawdowns near 10%.
• •Nifty valuations are 7% below long-term averages.
• •Elara expects a potential rebound as risks ease.