The ongoing West Asia war has drained momentum from Indian equities, pushing markets into oversold territory and reflecting extreme pessimism in March.
Market breadth, widely measured by the ratio advancing stocks to declining ones, has weakened significantly. Nearly half of the Nifty 500 stocks—242 companies—are trading close to 52-week lows, compared to just 61 near their highs, according to National Stock Exchange (NSE) data, on 30 March, highlighting the depth of the sell-off. The share prices are plus or minus ₹50 from the peaks or troughs of the last one year.
The advance-decline (AD) ratio has fallen sharply in the last three months. As of 30 January, the AD ratio was 1.38, nosediving to 0.38 on 27 February and further down to 0.2 on 30 March, the last day of stock trading on Indian exchanges owing to a festival holiday on Tuesday.
A falling AD ratio means that the number of declining stocks are growing relative to the number of stocks which are rising.
All the above indicators show pessimism indicating the markets are in an oversold territory.
Charting confirms overselling
Technical indicators such as the 200-day moving average and relative strength index (RSI) also point to bearishness in the market. When stocks are below 200-day moving average it signals a bearish trend. A RSI scale ranges from 0-100, where below 30 indicates an oversold territory and above 70 indicates an overbought territory.
“Only about 15-16% of Nifty 500 stocks are trading above their 200-day moving average—levels seen just around nine times in two decades during major crises like COVID, Russia-Ukraine war, and the Lehman collapse which highlights extremely weak market breadth,” said Rajesh Palviya, head of fundamental and technical research at Axis Securities.
The RSI for Nifty 50 is hovering near 30-32, signaling continuation of bearish strength rather than reversal, said Dhupesh Dhameja, derivatives research analyst, SAMCO Securities. The broader price structure suggests lack of buying interest and steady pressure from higher levels, he added.
India wilts, Asian peers gallop
The Nifty 50 index has shed 11.38% since 28 February when the US and Israel attacks on Iran started. Foreign Institutional Investors (FIIs) have net sold equities worth ₹1.12 trillion in March, according to the National Securities Depositories Ltd.
The rupee has been on a slide losing 4.23% against the dollar since the war began, touching ₹94.8.
In FY26, the Nifty 50 fell 5%, while the Sensex declined 7%, logging its worst performance in the last six years.
In contrast, key Asian peers posted strong gains, with South Korea’s Kospi surging 109%, Taiwan’s Taiex rising 53% and Japan’s Nikkei 225 advancing 45% in the same period.
Fragility seen continuing
The war is only a trigger for a market correction, an expert said. “The weakness is broader and driven by persistent FII selling, rupee depreciation, elevated crude oil prices, rising volatility, and higher global bond yields," said Sudeep Shah, head of technical and derivatives research at SBI Securities. "Unless these pressures ease, the market is likely to remain fragile with rallies being short-lived.”