Markets in technical correction zone: Are Sensex, Nifty oversold or should you pause SIP? Here's what analysts say

Markets in technical correction zone: Are Sensex, Nifty oversold or should you pause SIP? Here's what analysts say

• Sensex and Nifty plunged 10% from January highs.
• Brent crude surged over 26%, hitting $117.16 a barrel.
• Analysts urge caution; Nifty needs to surpass 25,000 for bullish trend.

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Benchmark indices Sensex, Nifty entered technical territory level on March 9 as they plunged 10% from record highs seen earlier this year on January 5.

Nifty entered technical correction level and fell down 10% from record high of 26,373 on January 5 as oil prices surged about 26% in early trade to their highest since July 2022 after Iran named Mojtaba Khamenei as successor to his father Supreme Leader Ali Khamenei.

At 10:47 am, the Sensex was down 2,177.61 points or 2.76% at 76,741.29, and the Nifty was down 685.10 points or 2.8% at 23,765.35. About 609 shares advanced, 3,116 shares declined, and 150 shares were unchanged.

Brent crude soared as much as 26.4% to $117.16 a barrel and was last up 23% at $114.08 by 9:15 am IST.

This begs the all-important question: Are markets in oversold territory?

One analyst said if Nifty goes below 23,535, a fall till 22,000 is very much on the cards.

"A plunge to 23,535 is awaited that would complete a 61.8 retracement of the up move since March 2025. Breach of the same should see multi leg downsides initially aiming the March 2025 low near 22,000 and November 2023 low near 19,000. Near term upside prospects depend on the ability to float above 24,000," said Anand James, Chief Market Strategist, Geojit Investments.

Another analyst said investors should go long only after Nifty crosses the 25,000 level.

"Given the prevailing global uncertainties and heightened market volatility, investors are advised to maintain a disciplined and selective approach, focusing on fundamentally strong stocks during market corrections. Initiating fresh long positions may be more prudent only after a clear and sustained breakout above the 25,000 level on the Nifty, as such a move would indicate improving sentiment and confirm the formation of a stronger bullish market structure," said Hitesh Tailor, Research Analyst at Choice Broking.

For investors uncertain about whether to continue or halt their SIPs, an analyst said "long-term investors with high risk appetite can nibble in strong themes".

"Brent crude has spiked above $115 delivering a big oil shock to economies and markets. Big oil importers like India will be hit hard if the West Asian conflict lingers long and crude price remains high. The market will price-in the economic consequences of this oil shock. Inflation will certainly move up whether the oil price hike is passed on to consumers or not.

"The unknown factor now is how long the conflict will last. This uncertainty will also weigh on FIIs who have again turned aggressive sellers in India after the short bout of buying in February. The lesson from history is that the impact of geopolitical issues like conflicts on markets do not last long. Therefore, investors have to be patient.

"Domestic consumption segments like banking and financials, automobiles, telecom and cement will not be impacted much by the crisis. Defense and pharmaceuticals will be relatively resilient. Long-term investors with high risk appetite can nibble at stocks in these strong themes," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

"India remains one of the world's most crude-sensitive large economies, importing nearly 85% of its oil requirements and nearly half of those imports transit through the Strait of Hormuz. A sustained elevation in crude prices doesn't just dent sectoral margins, it disrupts the entire cost architecture of multiple industries and wide economic outlook simultaneously. The sectors most exposed to rising energy cost in the near term includes downstream oil companies, paints, tyres and chemical sector where raw material costs are directly linked to crude fluctuations.

"Aviation players could be double squeezed, facing higher Aviation Turbine Fuel costs while simultaneously absorbing longer flight durations and rerouting expenses due to airspace closures. While auto sector could also feel the burden if the increase in crude price sustains and suppliers pass higher costs of material to OEMs. The hike in crude price if sustains could meaningfully hit the Q4 earnings both at sectoral and broader market basis. Beyond the corporate earnings impact, higher crude oil bills also accelerate India's foreign currency outflows and exerting depreciation pressure on INR too," said Ravi Singh, Chief Research Officer at Master Capital Services Ltd.