For all those who are panicking in this market correction the following sentence sums it up
“Darr Ke Aaage Returns Hain”
I tend to be very cautious when the markets overreach. For the last 10 to 12 months we had advocated to our clients to completely avoid any one time buys. In January 2018 we went ahead and gave in a recommendation (This raised many eye brows) to start booking profits in the small cap space (both in mutual Funds and stocks)
It’s now time to change course, for me these are exciting times, as I am writing this article the Nifty has lost @9% from its highs. This is a decent correction. Is the correction over – I don’t know nor does anyone else. The next support on the Nifty is at 10050 levels. If this level gets violated than the nifty could see a drop till 9550 levels. So should I be waiting till the nifty reaches 9550 levels? The answer to that is absolutely not as no can predict the bottom but you can always define value.
Speak with your investment consultant, start allocating buys at defined levels and stick to them. Remember do not be surprised that a stock value is the same at 10000 Nifty and 9800 Nifty Level. Stocks do not fall in a straight line. It’s the very reason for you to define levels individually for stocks and funds.
Some of the factors which have caused the recent correction are
These factors are not going to go away overnight. What they have done is bring on the correction and generate value for new investments. We could also see growth emerging from IT & pharma as the business fundamentals improve from a low point in their evolution cycle. Oil refining and marketing is another sector which looks very good and has reasonable valuations
Corrections are not bad and we could see FII flows back in the later part of the year as India will start looking very attractive from a valuation point of view
The greatest opportunities and wealth is generated during market corrections. Very few people manage to do this. You have to ask yourself if you have the discipline and conviction to be among those chosen few.