Nifty has closed below the Friday, the 13th low. Today's closing value was 8468.80 which indicates no interest in buying or fresh investment in market, however we are seeing good inflow of DII investment everyday. FII selling is continuing and the figure has crossed fifty thousand mark for the current year, which is worrisome indeed!
This writing is definitely targeted for fresh minds who haven't seen any bear market fall earlier. Last time we experienced such market fall in year 2008 when Nifty dropped around 60% from the last high in nine months price fall. Now, Nifty has dropped only 33% from January, 2020 high in just one month correction. No need to mention that is very fast and furious in nature due to pandemic fear of coronavirus.
Let us recap once, how Nifty behaved in earlier bear markets;
2nd July,1990 : Nifty was trading at 347.44 level (yes, it was our beloved nifty index)
2nd March, 1992 : Nifty touched the high and closed at 1261.65 (that is more than 3.5x)
1st April, 1993 : Nifty corrected and closed at 622.42 (almost 50% correction)
Let us recap once, how Nifty behaved in earlier bear markets;
2nd July,1990 : Nifty was trading at 347.44 level (yes, it was our beloved nifty index)
2nd March, 1992 : Nifty touched the high and closed at 1261.65 (that is more than 3.5x)
1st April, 1993 : Nifty corrected and closed at 622.42 (almost 50% correction)
1st Feb, 1994 : Nifty closed at 1349.49 (it went double again in an year)
2nd Nov, 1998 : Nifty was within the range and closed at 817.75 (40% correction)
During Jan-Feb, 2000, Nifty touched 1818.15 (more than 2x of last low)
On Oct, 2000 : Nifty made a low at 849.95, that is almost 50% correction from the high
During Jan-Feb, 2000, Nifty touched 1818.15 (more than 2x of last low)
On Oct, 2000 : Nifty made a low at 849.95, that is almost 50% correction from the high
Dec, 2003 : Nifty achieved a high of 2014.65 (it is again 2.5x from last low)
On April, 2004 : Nifty dropped at 1292.20 ( quick 35% correction, very similar to current fall)
January, 2008 : Nifty touched of 6357.10 level, another sparking 5x return on index itself.
The Great Bear Market in the recent times, in 2008-09, Nifty dropped by 65% from the high to 2252.75 level within nine months time, this was the biggest percentage fall among all above-mentioned price corrections).
Then market regained its lost ground and touched its last high 6300 level in November, 2010 (It means 3x return given even after recession) and again it corrected by nearly 30% at 4531.15 during December, 2011.
Then market regained its lost ground and touched its last high 6300 level in November, 2010 (It means 3x return given even after recession) and again it corrected by nearly 30% at 4531.15 during December, 2011.
March, 2015 : Nifty touched 9119.20 (that is 2x return again)
Feb, 2016 : Nifty dropped by 25% at 6825.80 level.
January, 2020 : Nifty made all time high at 12430.50 (Another 2x return)
Now we have already corrected almost 33% from the last high, if we see the history of nifty price corrections, then most of the time nifty corrected in the range of 30 to 50% from where we always have seen 2x to 3x return within few year timeframe. This corrections were excellence investment opportunity for investors who are waiting for a great opportunity to invest for three to five year time frame. In long term, India has always generated great return that attracted foreign investors to invest in Indian market for longer term prospect. Retail investors mostly driven by emotions, they end up in losing money in short term market drops due to fear that spreaded through the media mostly.
Now we have already corrected almost 33% from the last high, if we see the history of nifty price corrections, then most of the time nifty corrected in the range of 30 to 50% from where we always have seen 2x to 3x return within few year timeframe. This corrections were excellence investment opportunity for investors who are waiting for a great opportunity to invest for three to five year time frame. In long term, India has always generated great return that attracted foreign investors to invest in Indian market for longer term prospect. Retail investors mostly driven by emotions, they end up in losing money in short term market drops due to fear that spreaded through the media mostly.
Indian growth story is intact unless the root of Indian market is violated. Indian growth is based on its fundamentals, we have achieved macro-stability with our domestic consumption. The increasing trend in the overall growth rate is reflecting on the stock market returns.
Today Nifty has closed at 8468.80 that is 33% correction, if we accept the overall correction of 30-50% correction then we shall have our bottom around 6500 to 8500 level, that is a big zone, where we can start investment in few parts, that shall reduce the risk and help us to control retail emotions to get fearful if price drops at 50% level too! We shall be ready to invest near 6500 level too if it comes in current fall. We shall remember that none can predict the bottom, when market is giving such extraordinary levels to invest for next three to five years time, we must not miss the investment opportunity in search of the exact bottom.
Every bull market leaves its old hero! We shall look at new promising stocks that may lead in next bull rally. We shall identify the stocks or sectors that is having value. Fundamental analysis is completely different than Technical Analysis. You can emphasise on your strength, whether technicals or fundamentals, will definitely help you to find out growth stocks. I feel quality stocks from midcaps, pharma, service sector, good private banks, selectively small caps may outperform the market.
Fear spreads faster than greed. This is normal function of stock market to correct very fast after a spectacular rally, such drops are very quick to create fear in our mind. We shall remove the fear and find out the opportunities in market, as best return can be fetched from the investment at near of bottom, not after a good rally!
Above post is personal observation only, not a recommendation for buy or sell.
Suprb
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ReplyDeleteThis means market has done enough correction till now. Now this will be range & will go up from here ?
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DeletePerhaps, nifty has almost done with price wise correction however we have still left with time wise correction.
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