Nifty crashed around 11% in March as the rising hostilities in the oil-rich Middle East led to the prolonged closure of the Strait of Hormuz, triggering a massive rally in oil prices and raising questions about the impact on India’s macroeconomics.
After the sharp correction, some analysts noted that Nifty has fallen below its historical averages, which may hint at fairer valuations than what it had shot up to earlier. “Historically, over the past 10 years, the Nifty has traded at an average P/E of around 23x. Currently, it is trading at a P/E of 20x based on FY26E EPS of 1,090. Over the last 10 years we have also observed that the index has typically bottomed out at around 20x P/E level,” explained Divya Mandaliya Commodity Research Analyst at Anand Rathi Shares and Stock Brokers.
“With the index already correcting around 15% from its peak and correcting around 11% in the month of March 2026, valuations have turned more reasonable and attractive at the current level of Nifty which points to a early signs of bottoming out at the level of 22,000-22,300,” she added.
Elara Securities in its note said that historical patterns suggest limited downside for the benchmark index Nifty henceforth. The domestic brokerage cited data from the timeframes of seven major geopolitical conflicts in the past 25 years. It said that Nifty’s drawdown during the onset of conflicts has usually been capped at approximately 10%. Hence, historical patterns suggest limited downside for the benchmark index now, after the 11% crash in March.
Bull run ahead?
April has begun on a relatively positive note for the markets, with a clear relief-driven momentum emerging after a sharp correction, said Aakash Shah, Technical Research Analyst at Choice Equity Broking. He however cautioned that the broader tone remains one of measured optimism, not full-fledged bullish conviction. “The current rally in Nifty appears to be a relief-driven bounce, supported by oversold technical conditions and hopes of Middle East de-escalation,” he said.
From a technical perspective, Nifty had entered an oversold zone after its recent decline — a level where markets historically tend to stabilize and bounce back, he added. “Technically, the rally can extend over the next 1–3 weeks, driven by short covering and improving sentiment. But beyond that, visibility becomes uncertain,” he however cautioned.
As long as crude remains elevated, the upside in equities is likely to be capped, with intermittent rallies rather than a sustained bull trend, Shah said, adding that high oil prices directly impact inflation, fiscal balances, and corporate earnings, particularly for an oil-importing economy like India.
A sustainable bull run will require confirmation through cooling crude prices, return of FII inflows, and improved earnings visibility, he concluded.
Sensex closed 1,187 points higher at 73,134, while Nifty rose 348 points to end the session at 22,679 on Wednesday. The sharp rally in stock markets added around Rs 10 lakh crore to the total market capitalisation of all companies listed on BSE to Rs 422 lakh crore.
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