From The Economic Times · Nikhil Agarwal · · 2m
Nifty's 8-Week Losing Streak Sparks Relief Rally Hopes
Nifty's 8-week losing streak may trigger a relief rally but the big bottom remains far.
In brief
Nifty's 8-week losing streak may trigger a relief rally but the big bottom remains far. Nifty's 8-week losing streak has pushed the market into deeply oversold territory with only 12% of NSE 500 stocks above their 20-day moving averages, suggesting a short-term relief rally but not a durable market bottom. Originally…
Nifty's 8-week losing streak
Nifty has entered its eighth consecutive weekly decline, the longest losing streak in 25 years.
“Nifty has now entered its eighth consecutive weekly decline, the longest losing streak in 25 years”
Market oversold conditions
Only 12% of NSE 500 stocks trade above their 20-day moving averages, while 16% are above their 50-day averages.
“Only 12% of NSE 500 stocks are trading above their 20-day moving averages, while just 16% are above their 50-day averages”
Historical rebound patterns
History shows Nifty rebounded an average of 14.1% after seven-week or longer declines in the past 25 years.
“Following these declines, the index delivered an average gain of about 14.1% in the following weeks”
Current correction size
The current decline began on 16 August 2026 and has a cumulative correction of 8.7%.
“The current decline, which began on 16 August 2026”
Critical support levels
The market is near a horizontal support region formed by 21743 and 22182, reaction lows from 2025 and 2026.
“We are now in the close vicinity of a horizontal support region that is formed by 21743 and 22182, the reaction lows of 2025 as well as 2026 respectively”
Support region significance
This support region successfully arrested multi-month declines in previous two instances.
“The significance of this support region is that this region was successful in arresting multi month declines that preceded in the last two occasions”
Market breadth indicators
Only 18% of NSE 500 stocks trade near their 52-week lows, indicating growing market stress.
“The 52-week low number also points to growing stress, with 18% of NSE 500 stocks now trading near their 52-week lows”
Long-term breadth indicators
36.4% of stocks remain above their 200-day moving averages, suggesting no full-scale capitulation.
“36.4% of stocks remain above their 200-DMA and 26.2% above their 100-DMA”
Short-term oversold scenario
The market appears deeply oversold in the short term and ripe for a technical rebound.
“The market appears deeply oversold in the short term and ripe for a technical rebound”
Long-term market outlook
Any near-term recovery is likely a relief rally within a broader corrective move, not a durable market bottom.
“Therefore, any near-term recovery is likely to be a relief rally within a broader corrective move”
Auto stock weakness
The Nifty Auto Index has slipped towards the 25,260-25,200 support zone, coinciding with the 100-week moving average.
“The Nifty Auto Index has slipped towards the crucial 25,260-25,200 support zone, which coincides with the 100-week moving average”
Derivative data
80% of stock futures show short positions on Friday, with 70% showing short exposure week-on-week.
“around 80% of stock futures witnessing short positions on Friday and nearly 70% showing short exposure on a week-on-week basis”
Potential rebound target
The index may rebound towards 26,280 if it sustains above this level.
“The index is deeply oversold on daily charts and nearing oversold territory on the weekly timeframe, suggesting scope for a short-term relief rally towards 26,280”
Key support level
Any pullback below 26,280 may attract fresh selling pressure.
“Unless the index sustains above 26,280, any pullback is likely to attract fresh selling pressure”
Here's the gist
Nifty's 8-week losing streak has pushed the market into deeply oversold territory with only 12% of NSE 500 stocks above their 20-day moving averages, suggesting a short-term relief rally but not a durable market bottom.
