Manager Advisory

Advisory Note — How Long Do Indian Sideways Markets Last? Historical analysis of stagnation phases in NIFTY 50 & Sensex · 12 June 2026 For internal circulation only · Not investment advice Interactive dashboard: https://guru99-edu.github.io/market-stagnation-dashboard/ 1. Why this note Indian large-cap indices have made no durable new high since 26 September 2024. This note answers two questions from ~29 years of daily data: how long have similar sideways phases lasted historically, and how did they resolve? 2. Where we stand (as of 12 Jun 2026) NIFTY 50: last close 23,372; all-time closing high 26,329 (2 Jan 2026); below ATH -11.2%. Sensex: last close 74,566; all-time closing high 85,836 (26 Sep 2024); below ATH -13.1%. - In January 2026 the breakout attempt failed: NIFTY closed a marginal +0.4% above its Sep-2024 peak for just two sessions; Sensex stopped 0.09% short of its peak. Both then fell 11-13%. - Treating that as the failed breakout it was, the market has been range-bound since late June 2024 — roughly 23.5 months (and ~30.5 months by the price-band measure). - Maximum drawdown inside the phase — -16%: a correction, NOT a bear market. 3. Methodology (in brief) - Data: Yahoo Finance daily closes — Sensex from Jul 1997 (~29 yrs, 7,130 obs), NIFTY from Sep 2007 (~18.7 yrs, 4,595 obs). Maximum history available; nominal INR, price-only (no dividends). - Three independent definitions of "sideways", minimum 12 months: 1. ATH drought — from an all-time closing high until it is reclaimed. Two breakout rules: strict (any new closing high) and confirmed (must close >=5% above the old peak before relapsing — filters out false breakouts like Nov 2010 and Jan 2026). Two depth buckets: drawdown <=20% ("true sideways") and no limit (includes crash-driven stagnations). 2. ±15% price band — longest windows where every close fits inside a 30%-wide range. 3. Flat momentum — stretches where the rolling 1-year return stays within ±15%. - Resolution: forward returns measured 6 and 12 months after each phase ended. - Limitations: small samples (2-6 episodes per definition); the 1992-99 stagnation (~6.5 yrs) predates the data; nominal terms understate real stagnation; history is no guarantee. 4. Findings — duration of completed sideways phases (months) Sideways <=20% DD (confirmed): NIFTY: 2 episodes, min 21.4, max 28.4, avg 24.9, median 24.9. CURRENT: 23.5, ongoing. Sensex: 2 episodes, min 21.4, max 30.3, avg 25.9, median 25.9. CURRENT: 23.5, ongoing. All stagnations (confirmed): NIFTY: 4 episodes, min 21.4, max 76.8, avg 38.5, median 27.9. CURRENT: 23.5, ongoing. Sensex: 6 episodes, min 21.4, max 76.9, avg 40.6, median 30.2. CURRENT: 23.5, ongoing. ±15% price band: NIFTY: 5 episodes, min 14.8, max 33.9, avg 25.7, median 25.9. CURRENT: 30.4, ongoing. Sensex: 6 episodes, min 13.8, max 34.7, avg 23.9, median 24.8. CURRENT: 30.5, ongoing. Flat 1-yr rolling return: NIFTY: 1 episode, 12.5. CURRENT: 17.7 — longest ever. Sensex: 1 episode, 12.4. CURRENT: 17.7 — longest ever. The long no-limit episodes were crash-driven: Sensex 2000-04 (57.7 mo, -56%), both indices 2007-14 (~77 mo, -55 to -60%), Sensex 2010-13 (35.7 mo, -27%), 2015-17 (~24-30 mo, -16 to -23%), 2021-23 (~21 mo, -13%). 5. Key takeaways for traders 1. The typical Indian sideways phase lasts ~2 to 2.5 years (median 24-30 months). The current phase, at ~23.5 months, is at the historical median — mature, but not yet extreme. 2. Distinguish mild from crash-driven phases. Today's phase (max -16%) is structurally a mild one; those have historically resolved within 21-30 months. The 4.8-6.4-year stagnations all contained 50-60% bear markets first — not the current setup. 3. By two measures the current phase is already near records: the longest flat-momentum regime in recorded history (17.7 months vs the prior record of ~12.5), and top-quartile on the price-band measure (~30.5 months vs the 34.7-month record). Band-bound churn historically did not persist much past ~35 months. 4. Resolution has overwhelmingly been upward. After a confirmed breakout, 12-month forward returns ranged +11% to +44%, positive in 9 of 10 episodes across both indices (the lone exception: the January-2000 dot-com top). 5. Do not trust marginal new highs. Both major false breakouts (Nov 2010, Jan 2026) came ~2 years into a stagnation; buying the strict Nov-2010 breakout lost 19-24% over the following 12 months. CONFIRMATION LEVELS: NIFTY > 27,645 / Sensex > 90,128 (5% above the standing ceiling of 26,329 / 85,836). 6. Tail risk remains. Without a confirmed breakout, history allows mild phases to stretch to ~35 months and band phases to ~47 months of total no-new-high time — sideways persisting well into 2027 would not be unprecedented, and a deep external shock could reset the clock entirely. 6. Disclaimer Prepared from publicly available Yahoo Finance data for internal discussion. Sample sizes are small and definitions are parameter-sensitive (full parameters shown in the dashboard). Past market behaviour does not predict future results. This note is not investment advice and no trading decision should rest on it alone.