Nifty at 27,000? Why extreme pessimism could signal a long-term buying opportunity

Showcasing a strong rebound, Nifty50 has reclaimed 23,000 mark. Nifty has shown a strong bullish divergence on the daily RSI, suggesting a clear loss of downside momentum, according to Anand Rathi Share & Stock Brokers. Despite recent price weakness, momentum has steadily improved, indicating seller exhaustion and the formation of a base.

The sharp rebound from lower levels confirms aggressive demand entering the market. However, Anand Rathi emphasises that this remains an early signal and not yet a confirmation. A decisive breakout above the 23,100–23,400 range is essential to validate the divergence and confirm a trend reversal.

Until such a breakout occurs, the index is likely to remain volatile and range-bound, though the underlying structure is gradually turning constructive. Anand Rathi notes that the overall market structure is mixed in the short term but increasingly positive on a higher timeframe.

On the daily chart, the near-triple bullish RSI divergence and recovery from the 22,200 zone suggest fading selling pressure and base formation. The weekly RSI approaching extreme oversold levels further indicates the market may be closer to a bottom than the start of a fresh downtrend.

Nonetheless, confirmation is awaited as the index continues to trade below the key resistance band of 23,100–23,400. Anand Rathi points out that only a decisive breakout above this zone would confirm a durable bottom and trigger the next upward leg.

On the downside, the 22,000–21,700 zone remains a critical support level. While expected to act as a strong base, a break below 21,700 could lead to a deeper correction, potentially towards the 20,000 mark, especially amid uncertain global conditions that may cause sudden volatility spikes.

Anand Rathi highlights that markets typically bottom during phases of fear and pessimism, and the current setup reflects a transition from distribution to accumulation. This suggests a cautious but constructive outlook in the near term.

Looking ahead, if the support zone holds and a breakout above resistance occurs, Nifty could resume its primary uptrend, with upside targets gradually extending towards the 27,000+ level over time. Investors are advised to remain patient and accumulate gradually, as periods of extreme pessimism often present the best long-term opportunities, despite short-term discomfort.

Adding to this, ICICI Securities said that the Nifty50 is more insulated from the Gulf crisis than the broader market and a single quarter of supply disruption in the CY26 oil markets may not significantly impact Nifty50 earnings. "However, rising geopolitical risks imply that the Nifty P/E may remain subdued between 18-19 times in the near future, providing a one-year forward target of 27,000."

Indian equities corrected sharply in March 2026 with the Nifty falling 11.3 per cent as the energy shock from the US-Iran conflict sent crude oil prices soaring. Markets sought relative safety in power, healthcare and IT sectors, said SBI Mutual Funds. With largecap valuations now inexpensive, any moderation in energy prices could lead to a swift recovery, it said.

"If the energy shock were to recede soon, on a potential agreement between US and Iran, earnings and macro impact could be transient and potentially already factored into equity prices with the recent market correction. On asset allocation, our model suggests early teens returns for Indian large cap indexes with relative preference still for large caps versus mid and small caps," it added.