India’s equity markets are nearing a point of technical oversold conditions, with some investors pointing to the rising oil prices and a depreciating rupee as catalysts for the recent slump. The Nifty 50 index has dropped to a seven-month low, and a key momentum indicator, the 14-day Relative Strength Index (RSI), is approaching the 30 mark — a level often interpreted as oversold by technical analysts. Historically, the Nifty 50 has shown a tendency to reverse its downward trend when the RSI hits this threshold. However, there have been instances where the index has remained below this level for extended periods.
The ongoing selloff has also impacted the Nifty Smallcap 250 index, with its RSI reaching the most oversold levels seen since June 2022. The index posted its largest single-day drop since August 5, signaling heightened concern among small-cap investors.
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