The Indian stock market has taken a beating in recent weeks.
Is The Stock Market Correction Near Its End?
Stock Market Today: When almost every stock in your portfolio is flashing red, the first instinct is to exit the market. But that may not always be the right move. The Indian stock market has taken a beating in recent weeks. For investors watching their portfolios shrink, the question is no longer just how much further the market can fall. It is whether this is the time to sell or start buying stocks at lower prices. One reason investors may not want to panic is valuation. In simple terms, the market is no longer carrying the same valuation premium it had at its peak. The fall has also already taken a sizeable chunk out of prices. But that does not mean the market cannot fall further. That is why Sharma does not see the current situation as a signal to put all available money into equities at once. Instead, the opportunity may be to start accumulating gradually. Foreign investors have been selling Indian equities. But domestic institutional investors have continued to provide support. Domestic SIP flows are also continuing to support equities. As global and NRI investors eventually look to reallocate money, India could also benefit from fresh flows. Oil Is The Other Big Risk There is another factor that could decide where the market goes next: crude oil. It also means diversifying instead of putting the entire portfolio into equities. Gold, for instance, can provide another layer of diversification during periods of market uncertainty.
Because it gives the market an important cushion when global investors are pulling money out, this domestic flow matters. The Nifty 50 is now about 14 per cent below its 52-week high and has fallen around 6 per cent in the past month. The Nifty 50 is currently trading at around 19.4 times earnings. That is close to its long-term average of around 20 times. On September 30, DIIs bought a net Rs 11,272 crore of Indian equities. That more than offset FII selling worth Rs 10,148 crore.
CEO, Green Portfolio, the extreme pessimism in the market could actually be a reason for long-term investors to start looking for opportunities, according to Divam Sharma. “Sentiment is at its worst right now, and historically that is when long-term investors should start allocating rather than exiting,” Sharma told NDTV.
Expensive oil can put pressure on the rupee, widen the import bill and make inflation harder to control. So, Should Investors Buy More Or Exit? For long-term investors, the current correction could be a time to start accumulating quality stocks. But it is not a situation where investors should go all-in. That means keeping some cash ready in case markets fall further.
Because the country imports a large share of its crude requirements, that is bad news for India. Oil prices are currently above $100 a barrel.
Promoted Listen to the latest songs, only on JioSaavn.com Sharma said a case for gradual buying is emerging, but investors should stagger their purchases rather than deploy all their money at once.
