Is the market sell-off a Diwali offer you have been waiting for?

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Subscribe to enjoy similar stories. MUMBAI : Diwali is one of India's most significant festivals, marked by various spiritual and religious rites. A key tradition is Muhurat trading, where traders and investors perform Laxmi Puja for prosperity and strategically accumulate valuable stocks to diversify their portfolios.

During Diwali, shopping is popular due to numerous offers, and the recent market correction can be viewed as a “Diwali offer". It’s the power of a bullish trend when the Nifty50 dipped below its 200-day moving average (DMA) in March 2023and yet the bulls grabbed the opportunity at the long-term support zone offering. The markets rallied from 17,800 to 26,277—a gain of 47% in just 18 months.

This rally included periods of consolidation as well as a few sharp corrections. Currently, the Nifty has not breached its medium-term rising trendline, signalling that the bulls are still in the game. Additionally, the 14-period relative strength index (RSI) is in oversold territory, indicating a potential reversal that could offer bulls an opportunity.

Historically, the rally in May 2023 experienced multiple price and time corrections. In terms of price retracements, previous corrections witnessed support within the 38.2-50% Fibonacci retracement zone from their respective swings. Similarly, prices are likely to find support within that range this time.