A gap-down happens when a stock opens at a much lower price than where it closed the day before, leaving a ‘gap’ on the price chart that’s considered a sign of investor panic. The Sensex and Nifty fell 1.5% the next day.
According to Samco Securities, the initial fall on Thursday was the 107th instance since 2000 and the 41st since April 2020 when the indices opened with a gap-down of 1%.
The brokerage said since 2020, the Nifty had rebounded 73-83% out of the 40 occasions of similar gap-downs over the next two months. Similarly, since 2000, the index has bounced on 67% of the 106 occasions over the subsequent two months. “If this historical trend persists, the current drop could represent a strategic buying opportunity for investors,” said Samco’s analyst Raj Gaikar.
