Nifty 50 Faces Its Worst Annual Performance In Over A Decade As November & December Rebound Hopes Remain Uncertain

The Nifty 50 has lost around 13% so far in 2026, putting the benchmark on course for its weakest annual performance in more than a decade. October brought little relief to Indian equities. However, the index’s move into oversold territory has raised hopes of a possible technical recovery in November and December.

The outlook remains uncertain. Elevated crude oil prices and continued global interest in artificial intelligence (AI)-linked investments could limit the scope for a sustained rally, according to brokerages IIFL Capital and Nuvama.

Nifty 50 Recovery Hinges On Key Technical Levels

IIFL Capital sees the Nifty 50 potentially moving towards 23,300–23,500 as a result of its oversold position. However, a stronger move above 23,500 may require positive announcements that improve market sentiment or encourage foreign investor inflows.

Nuvama said market positioning at the start of the November derivatives series did not indicate a clear direction. It expects oversold conditions to lift the index towards 23,250. A sustained recovery, however, would require a decisive move above 23,480.

The assessment of oversold conditions is based on the relative strength index (RSI), a momentum indicator. A reading below 30 can suggest the possibility of a short-term rebound, but does not confirm that a broader decline has ended.

Foreign Investors Reduce Bearish Positions

Foreign investor positioning in Nifty 50 futures shifted during October. Nuvama data showed that foreign investors cut their short positions in index futures from 267,000 contracts at the beginning of the October series to 221,000 contracts by its end.

They also increased long positions in individual-stock futures and reduced open interest in index futures. Nuvama said the changes suggest that investors have moved away from aggressive bearish bets towards a more balanced position.

Crude Oil And AI-linked Investments Weigh On Sentiment

Indian equities underperformed broader emerging markets in October. The MSCI Emerging Markets Index fell 7.4% as investors reassessed exposure to AI-linked investments amid high valuations. A brief unwinding of the AI trade did not sustain buying momentum in Indian shares.

High crude oil prices remain another concern. As the world’s third-largest crude oil importer, India is exposed to higher import costs. These can add to inflation, strain public finances and pressure corporate profits.

Information technology (IT) stocks provided some support during the October derivatives series. The sector rose 16.3%, helped by better-than-expected quarterly results and a temporary easing of the AI trade. IIFL Capital described IT stocks as the only clear positive during the period.

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