This may not be the Right Time to Short Nifty
FinTech BizNews Service
Mumbai, March 16, 2026: Nifty is currently trading at an appealing levels for the Bears but still it may not be the best trade to short Nifty at the current level. There are two prime arguments based on the past data that indicates avoiding going short is best advised at this time, said Jahol Prajapati and Saurav Chaube, Research Analyst, SAMCO Securities in a note released on Monday.
The first by Prajapati, is about the Nifty/Brent Crude ratio, which is approaching a key long-term support zone. Historically, this ratio has rebounded from similar levels, suggesting limited downside from current levels and the risk-reward for fresh short positions may turn out to be unfavourable.
The second argument by Chaube, is based on the historical data of over the past 15 years of
market behaviour, when the markets have fallen more than 5% in a week. Including recent fall of
more than 5% during a week, earlier seven instances of such fall shows that the market often
stabilises and rebounds in the subsequent weeks, barring periods of systemic stress.
The recent sharp decline in the ratio appears largely driven by a spike in global crude prices,
particularly Brent Crude Oil. If crude prices stabilize or decline, the ratio could rebound even if
Nifty remains broadly stable.
This rebound could occur in two possible ways. First, crude prices may decline while Nifty
remains stable, improving the ratio. Second, oil prices may hold steady while Nifty moves
higher, again leading to a recovery in the ratio.
Given this setup, the probability of a technical bounce from support increases, making
aggressive bearish bets on Nifty less attractive for now.
Over the past 15 years, there have been seven instances when the index declined more than 5%
in a single week. Historical data shows that the market often stabilises and rebounds in the
subsequent weeks, barring periods of systemic stress.
On average, the index delivered returns of 3.4% in the following week, 3.0% in two weeks, 1.4%
in three weeks, and 1.9% over four weeks after such declines. The probability of positive returns
remained high, with 71% positive outcomes in the 1-week, 2-week and 4-week windows, while
the 3-week period recorded positive returns 57% of the time.
The latest instance on 13 March 2026, when the Nifty fell 5.3% for the week, places the market
at a historically similar setup.
