Investors worried over bloodbath as Nifty 50 sees longest weekly losing streak in 25 yrs - Outlook for H2 from experts

Indian equity benchmarks extended their losing streak for an eighth consecutive week, marking the Nifty 50’s longest weekly decline since 2001. Rising US 10-year Treasury yields, uncertainty over the US-Iran conflict and heightened volatility in Brent crude prices continued to weigh on investor sentiment.

Foreign institutional investors (FIIs) added to the pressure, selling equities worth ₹44,012.82 crore during the week, their highest weekly selling since June 2026. The Nifty 50 fell 3.1% during the holiday-shortened week, while the BSE Sensex declined 2.7%, taking its eight-week losses to 8.7% and 8.4%, respectively.

The Indian stock market will remain closed on Friday, 2 October, for Gandhi Jayanti, with trading resuming on Monday, 5 October.

Nifty 50 sell-off: Broad-based pressure hits markets

The Nifty 50 recorded its steepest weekly decline in more than six months, and the Sensex in more than four months. On Thursday, 1 October, the Nifty 50 fell 0.88% to 22,421.95, while the Sensex declined 0.79% to 71,909.70.

The selling was broad-based, with 15 of the 16 major sectors ending the week lower. Small-cap and mid-cap indices declined 3.4% and 3.6%, respectively.

Auto stocks fell 5.9%, while consumer durables declined 6.2% during the week as a weak monsoon added to concerns around consumption and demand.

The rupee also slipped to a two-month low, while India's benchmark 10-year bond yield climbed to its highest level in more than two years.

The market is also factoring in a potential shift in the Reserve Bank of India's monetary policy stance. The RBI is expected to raise its benchmark interest rate by 25 basis points to 5.50% on 7 October, marking its first rate increase since 2023, according to a Reuters poll of economists.

Higher domestic rates, elevated global yields, crude oil volatility and continued foreign selling could remain key factors for equities as investors assess the outlook for the second half of FY27.

Are Nifty 50 valuations attractive after the correction?

Despite the recent sell-off, Mohit Gulati, Managing Partner at ITI Alternatives, said valuations now appear attractive, provided India does not enter a permanent structural de-rating.

“Valuations today look attractive, as long as India isn't facing a permanent structural de-rating, and we don't believe it is,” Gulati said.

He described the current environment as a combination of global and domestic pressures, with international headwinds coinciding with softer domestic macroeconomic conditions.

Looking ahead to H2, Gulati said earnings delivery will be crucial for rebuilding investor confidence. Until earnings provide greater visibility, he expects volatility to remain elevated, and suggests that long-term investors could focus selectively on quality stocks rather than exit the market.

What happened after previous extended losing streaks?

The Nifty 50 has now closed lower for eight consecutive weeks, an unusually prolonged losing streak. Sudeep Shah, Vice President – Technical and Derivatives Research at SBI Securities, noted that such periods have historically been rare.

Since 1992, there have been only six earlier instances of prolonged weekly declines, with the longest stretches lasting eight weeks in 1993 and nine weeks in 2001.

Shah said the end of such losing streaks has historically been followed by a rebound. Across the six instances, the Nifty delivered average returns of around 11% after one month, 12% after three months, 14% after six months, and 39% after 12 months.

One-month and 12-month returns were positive in all six instances, while three-month returns were positive in five and six-month returns in three cases. The median 12-month return was around 23%, although Shah noted that the average was boosted by exceptionally strong gains following the 1993 and 2020 episodes.

Historical parallels offer a mixed picture

Shah cautioned that historical comparisons need to be viewed in the context of the prevailing market environment. The 2008 episode, in particular, provides a relevant comparison, with crude oil near $145 a barrel, elevated inflation and the global financial crisis unfolding at the time.

Following the end of that losing streak, the Nifty initially gained 9.5% in one month but subsequently fell around 10% over three months and 22% over six months.

The current environment has some similarities, including elevated crude prices, Strait of Hormuz-related disruption, rising global yields and persistent FII outflows. However, Shah pointed out that the Nifty's 8.74% decline over the past eight weeks is significantly lower than the roughly 22% fall during the comparable phase of 2008 and the 33% decline in 2020.

Nifty 50 outlook: 22,600–22,400 zone in focus

Shah said another week of selling pressure cannot be ruled out, cautioning that the end of the eight-week losing streak alone would not necessarily signal the end of the broader downtrend.

The 22,600–22,400 zone will therefore remain crucial for the Nifty 50. A sustained hold above this range could trigger a pullback, while a decisive break below it could increase the risk of another leg lower.

For H2 FY27, the market's direction is likely to hinge on a combination of earnings performance, crude oil prices, global bond yields, foreign flows and geopolitical developments.