Average Bear Market Duration Points to Late-Cycle Positioning

Indian equity markets appear to be moving towards the latter stages of the ongoing correction cycle, with historical data indicating that both the duration and magnitude of the current phase are broadly aligned with past trends.

Bear Market Duration Signals Maturity of Current Cycle

Historical patterns suggest that bear markets have lasted around 20 months on average, with cycles ranging between 11 months and 32 months.

Previous downturns reflect this structure. Markets have recorded corrections of 27.6 per cent over 17 months and 20.7 per cent across 11 months, while some phases extended closer to two years with comparable declines, according to HDFC Securities Big Report which was released on Wednesday.

In comparison, the current cycle has seen a correction of 18.7 per cent over a 10-month period, placing it within the typical range observed in earlier cycles, both in terms of time and scale.

Recovery Phases Have Typically Been Stronger

While corrections tend to be relatively shorter, recovery phases have historically delivered stronger and more extended gains.

Data shows that markets have rebounded by 68.3 per cent over 29 months in one cycle and 104.6 per cent over 17 months in another. These recoveries have generally followed phases of valuation reset and earnings normalisation.

Market Behaviour Reflects Established Cycle Patterns

The current phase follows a period of strong upward movement, where markets rose 42.1 per cent over 10 months prior to the correction.

Such sharp rallies are typically followed by consolidation or corrective phases, as valuations adjust and market expectations recalibrate. The ongoing correction appears consistent with this pattern.

Liquidity Trends Indicate Continued Participation

Despite the correction, broader participation indicators remain stable. Market activity has not seen a significant decline, suggesting that liquidity conditions continue to support the market structure.

This stability in participation often characterises later stages of correction cycles, where volatility persists but structural engagement remains intact.

Near-Term Outlook Anchored in Cycle Positioning

With the current correction duration at 10 months against a historical average of 20 months, and the magnitude at 18.7 per cent, markets appear to be progressing towards a stabilisation phase.

While identifying an exact bottom remains uncertain, the data indicates that the market is likely in the later part of its corrective cycle.

The broader trend continues to reflect cyclical behaviour, where periods of correction, aligned with historical norms, gradually transition into phases of recovery driven by earnings and liquidity support.

The Big Review report was released by HDFC Securities Ltd MD & CEO, Dhiraj Relli, along with Chief Research Officer – Equities, Varun Lohchab, Head of Institutional Equities, Unmesh Sharma and Head of Prime Research, Devarsh Vakil.

Source: Big Review Report 2026