Mumbai, March 1 Past corrections -- during Lehman’s crash, the Taper Tantrum, demonetisation, or Covid-19 -- have always appeared as strong buying opportunities in hindsight, said market experts on Saturday, even as Indian stock markets witnessed a sharp correction this week.
According to Krishna Appala, Senior Analyst at Capitalmind Research, “the current market correction may seem painful, but history suggests that years from now”, it may experience a boom.
During the week, the benchmark indices declined over 3 per cent due to widespread selling.
Concerns over a deepening trade war and fears of a slowing US economy triggered selloffs in key sectors, including IT, auto, and stocks.
The US is expected to impose a 25 per cent tariff on imports from Canada and Mexico starting next week, along with a 20 per cent tariff on Chinese goods. The announcement rattled global markets, leading to a nearly 2 per cent plunge in key Indian indices on Friday.
“Over the past 30 years, markets have fallen over 20 per cent in multiple years, yet have ended positive in 22 out of those 30 years,” Appala said.
The expert noted that periods of steep declines are often followed by sharp recoveries, and staying invested with a long-term perspective has historically proven to be a successful strategy.
“Market discipline matters in tough times just as much as in strong ones, and achieving long-term returns isn’t a straight path -- it includes periods of steep drawdowns and sharp recoveries,” he said.
On Monday (Feb 24), the Sensex dropped by 857 points to close below 74,000, while the Nifty lost 242.55 points, ending at 22,553.35.
Despite some relief on Tuesday (Feb 25), when the Sensex gained 147 points, the Nifty extended its losing streak, slipping for the sixth straight session.
Investors remained cautious ahead of the monthly derivatives expiry, leading to a mixed market performance on Thursday.
While financial and metal stocks saw gains, auto and capital goods stocks faced pressure. The RBI’s decision to lower risk weights on bank financing for NBFCs and microfinance loans provided some support to stocks like Shriram Finance, Bajaj Finserv, and Bajaj Finance.
However, on Friday, the domestic benchmark indices fall by nearly 2 per cent.
The Nifty closed at 22,124.70, down 1.86 per cent, while the Sensex settled at 73,198.1, losing 1.90 per cent.
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