Raj Gekar, research analyst at SAMCO Securities, pointed to a unique market pattern. This occurs when the Nifty 50 opens with a decline of more than 1% in two consecutive trading sessions. “Markets have a language. Sometimes, they repeat a phrase out loud to get investors to pay attention,” he added.
The logic of following this arrangement is straightforward. Two rapid gap openings in succession often indicate that something meaningful has gone wrong globally or economically. In such cases, expecting a quick recovery is ‘wishful thinking rather than a sound strategy’.
Historical data since the inception of the Nifty 50 shows eight such events before the latest one. These events coincided with periods of global stress, including the 2011 European debt crisis, the March 2020 COVID-led market collapse and price hikes and the Russia-Ukraine related sell-off in 2022.
On March 4, 2026, the markets saw the ninth episode of this pattern, panicked by mounting geopolitical tensions. The US-Israeli attack on Iran, the assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei, and fears of unrest in the Strait of Hormuz have sent crude oil prices soaring, shaking world currencies and triggering broader market volatility.
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The data suggests that the market usually struggles to recover quickly after such signals. Over the eight historical periods, prior returns were negative on average over the next three to five trading sessions. Even after the March 2020 COVID crash left extreme volatility, markets generally continued to move lower or sideways.
“Rapid V-shaped recovery is rarely seen under such circumstances,” said Geker. According to the note, the persistent gap reduction on this scale often reflects institutional investors reducing exposure rather than simply moving money between sectors.
The current macro backdrop also shows many pressure points. Foreign portfolio investors remain steady sellers, India’s VIX has climbed above 20, and the rupee is under pressure. Brent crude also rose on fears of supply disruptions. Meanwhile, recent Bank of Japan rate hikes have tightened global liquidity conditions.
“These are structural pressures that usually take time to stabilize,” Gekar said. The pattern itself should not be interpreted as a buy signal, Nott cautioned. “Two consecutive gaps down more than 1% is not a buy signal. It’s a market path that indicates the bottom has changed,” Gaiker said.
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The trick for investors is to stay disciplined instead of rushing to buy the first dip. “Avoid panicking, but also avoid under-fishing,” Gaeker said, adding that respecting the cutoff level and waiting for clear signals may be the most effective approach.
(Disclaimer: The suggestions, recommendations, views and opinions given by the experts are their own. They do not represent the views of The Economic Times)
