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Fall in markets – historical trends suggest bottoms are near

ICICIdirect Research 21 Feb 2025 DISCLAIMER

Since 2006, the average fall in Nifty 50, Nifty Midcap 100 and nifty Smallcap 100 is similar to the tune of 27%-30% barring 2008 and 2020. The duration of the fall is also similar at around 7-8 months. (The larger bull/bear market fall however may be higher in midcap/smallcap but the rally post he fall is also higher).

Currently we are in the 6th month of the market wide-fall.

Historically, since 2006 the average fall in the Nifty Midcap 100 and Nifty Smallcap 100 has been around 27% and 29% respectively barring 2008 and 2020 period. Currently, with midcap and smallcap already corrected by around 20% and 24% respectively, the risk-reward is favourable for midcap/smallcaps as downside looks limited.

The fall in the Nifty 50 however has been only to the tune of around 14% which is normal bull market correction (Average fall in Nifty 50 is 27%). However, the correction in the midcap/smallcap is approaching the average fall which is generally visible in bear markets.
Counterintuitively and as against general market perception, the fall in midcap and smallcap looks limited as compared to Nifty 50.

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