BROAD EXPANSION · 73% confidence
58% above 50-DMA · healthy
-₹1,04,667 Cr · 21 days · HEAVY SELLING
Market Education
How to Tell When the Market Regime is About to Change (Before the Headlines Do)
Regime Transitions Are Predictable
Market regimes do not flip randomly. They follow transition paths that have been observed repeatedly across 11 years of Indian market data. The typical sequence: Broad Expansion → Rotational → Narrow Leadership → Defensive → Panic → Recovery Transition → Broad Expansion. Not every cycle passes through every regime. The most common skip is from Narrow Leadership directly to Recovery Transition, bypassing Defensive and Panic entirely — this happens when the FII selling trigger resolves before structural damage occurs.
Signals For Each Transition
Broad Expansion → Rotational
Breadth drops from above 60% to 40-50%. Sector leadership begins shifting. The first sign that broad participation is narrowing.
Rotational → Narrow Leadership
Breadth drops below 35%. Only 1-2 sectors show positive returns. FII selling typically intensifies. Midcaps and smallcaps underperform.
Narrow Leadership → Defensive
Leading sectors crack more than 2% in a session. FII selling accelerates. DII buying volume drops — the floor weakens. Defensive rotation becomes visible.
Defensive → Panic
Breadth collapses below 20%. VIX spikes above 25. FIIs panic-sell. Correlations go to 1 — everything moves together. Historically the shortest phase.
Panic → Recovery Transition
VIX peaks and begins declining. Breadth stops falling. First day of net FII buying or sharply reduced selling. The most important reversal signal in Indian markets.
Recovery → Broad Expansion
Breadth crosses above 60%. Midcaps and smallcaps start participating. FIIs turn consistently net buyers. VIX stabilizes below 16.
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