India's benchmark index Nifty 50 has ended a rare four-month losing streak that occurred just seven times in the index's full monthly history, according to DSP Mutual Fund data. The 14.8% decline over four months appears to have marked a capitulation point, with historical data showing that similar streaks have historically preceded strong recoveries. Across the six completed cases of four-month-plus losing streaks, the index delivered average returns of 40.7% over the following year, while the median one-year gain was 20.8%.
The ongoing selloff has prompted significant portfolio repositioning among institutional investors. ICICI Prudential's Balanced Advantage Fund, the second-largest in its category with assets of ₹71,150 crore, raised its equity allocation to 61.9% as of March 31, the highest level in nearly five years. As reported by The Economic Times, S Naren, ED and CIO at ICICI Prudential AMC, stated that based on valuation and sentiment indicators turning more favourable, this represents an appropriate time for investors to increase equity allocation gradually.
The historical data reveals a clear pattern where longer declines typically generate stronger rebounds. While one-month negative streaks generated average one-year returns of 22.4%, four-month-plus episodes delivered nearly double returns of 40.7%. According to DSP's analysis, the longest streak was an eight-month run from September 1994 to April 1995. Notable historical recoveries include the four-month decline ending in January 1991 that led to a 117.9% surge over the next year, and the August 1998 case that produced a 65.6% one-year gain.
Quant Mutual Fund has identified signs of capitulation in Indian equities, which implies that the worst is behind us. The fund expects a turnaround in the earnings revision cycle backed by recent reforms to power the next phase of market ascent. As reported by The Economic Times, the fund believes global capital is underestimating the trade agreement between India and the US, which will be rewarded in the longer term. Despite recent geopolitical shocks and sharp crude price rises, coordinated government and regulatory action is expected to support the RBI's stance of low policy rates for an extended period.
The fund has increased deployment from last month's heightened cash levels, capitalising on attractive valuations. Quant's portfolio is tilted towards large caps with good overall liquidity, while select mid and small cap exposure has been increased. The fund remains underweight manufacturing companies due to input cost and supply chain uncertainties, but stays constructive on energy, large infrastructure, select NBFCs, insurance, AMCs, private sector banks, hotels, pharmaceuticals, telecom and select consumption themes including FMCG and food processing companies.
