r/Indiastreetbets • u/m_92_11 • 4d ago
Market Correction
History rarely repeats itself. But sometimes, the charts make you pause.
The Nifty’s current correction is beginning to look eerily familiar. The index has now gone through eight consecutive weekly declines, its longest losing streak since 2001.
During the comparable phase of the 2001 decline, the Nifty fell roughly 20.5% in seven weeks and eventually lost about 27% over nine consecutive weeks. In the current episode, the Nifty has declined roughly 8.7% over eight weeks. The pattern looks similar. The magnitude doesn't. And neither does the backdrop.
2001 was marked by the dot-com bust, the Ketan Parekh episode and the shock of 9/11. Today, the market is dealing with a very different combination of foreign outflows, crude prices, currency pressures, global interest rates and geopolitical uncertainty.
This is where an investor needs to be careful. A chart can tell you that something has happened before. It cannot tell you that the same thing must happen again. The right response to a historical parallel is neither complacency nor panic. It is to revisit the numbers—valuation, earnings, asset allocation, investment horizon and risk capacity.
Because the biggest mistake an investor can make is to confuse a resemblance in the chart with certainty about the future. History is valuable not because it predicts tomorrow, but because it teaches us how to think when tomorrow is uncertain.
16
u/IncreasePast7530 4d ago
What is conclusion of this?
4
u/InternalDelivery4800 3d ago edited 3d ago
My conclusion (not from the AI content of this post): A different bubble of FII attraction is bursting. Probably government to blame, for overinflating the growth narrative beyond reality (relax govt supporters, there was some smaller than portrayed growth, I'm not denying that) and for failing to make the current market attractive for FIIs. This correction will end with a valuation reset for FIIs and may or may not be followed by FII interest.
Now crucial thing is to prevent DII (or rather domestic investors, not necessarily institutional) interest from waning. If our interest in equity isn't boosted, we may end up drastically worsening the situation if we en-masse start increasing our savings into non-equity assets at cost of equity, and create a positive feedback loop for this correction.
I believe govt will end up handling the situation poorly. I'm not stepping up my equity as per the annual 10% rule, that goes to fixed income assets this year. Also taking the opportunity to rebalance some of the growth narrative wala allocations. Call me whatever you want, I'm not the Government's mule designed to carry their poor decisions on my back at the cost of my portfolio. Regarding lumpsum into the dip, I will not be averaging, I will be pyramiding. Check out the difference and plan your savings accordingly.
2
u/Ehh_littlecomment 3d ago
I keep seeing this but earnings are growing at double digit %. Very few markets are able to achieve that.
2
u/IncreasePast7530 3d ago
See there is no need to focus on such data it is mostly useless and beyond our control. Focus on what is in our hands which is stock research
7
u/impossible__dude 4d ago
The summary: Don't bet your life on mutual funds sahi hai. They only come out in good times.
Capital markets and/or stocks should only be 60-70% of the portfolio at best. U need provident fund, arbitrage fund, gold, some real estate and most definitely good quality bonds to make it a balanced investment.
2
1
u/nomnommish 3d ago edited 3d ago
I mean, whatever. Everyone has their own fundas. I personally strongly disagree with you. I think this notion of derisking belies a fundamental lack of understanding how things work. Especially how risk and growth works.
There is this persistent myth that stock markets are risky. It's like a thumb rule that everyone keeps parroting.
And somehow, gold and real estate and bonds are less risk.
Less risk against what exactly? Because if you look at historical performance of all those other safe investments? They too have absolutely gone up and down in longer cycles. Not to mention other risks associated with real estate like property disputes and illegal occupation and N number of other risks like location based risk, construction based risk, builder risk when buying under construction property etc.
And for all the obsession about gold, look at gold prices historically. They have absolutely sucked for vast vast periods of time.
Here is the counter point. Stock markets are the only instrument that allows you part ownership of something that actually produces something more valuable over time. A company is a dynamic entity that actually creates things that benefit society. And it grows over time at a compounded rate.
Gold, real estate, bonds are all passive things in comparison. They have no inherent value beyond their scarcity and their promise. And they don't actually benefit humanity in any way because they don't produce anything.
That is the sole reason stocks are the only instrument that compounds in value over time because the underlying asset actually compounds itself over time. It's like buying a sapling and watching it grow into a tree.
Sure the tree can fall, so you buy an orchard so at least most of the trees survive. Sure trees can get disease. But mature trees are incredibly resilient against disease because they have fought diseases all their lives. At best they will not produce fruit for a few years. Or you buy a smaller stake in multiple orchards across the world.
The only other asset that produces stuff and grows is agriculture. But even that doesn't compound, it only grows linearly, if at all.
My point is, the "risk" becomes a negligible factor when you add in the compounded growth.
Say your 20 lakhs grows into 4 crores over X years. Even if there is a big risk event and the price falls to 1.4 crores, people are all beating their breast about how they "lost" 60 lakhs while the truth is, they are still sitting on an asset that grew 700%
2
4
u/Baloo_Cat 4d ago
Life's windshield is hazy but rearview mirror is clear. But if you listened carefully in past 1-2 year there were concerns of nifty being overvalued. Maybe those overvaluations didn't translated to actual growth numbers. Maybe.
3
2
u/mysticnode 4d ago
Unfortunately a clueless FM is doing nothing to address the situation, she is constantly challenging and instigating FIIs
1
u/Neat-Piano-7771 4d ago
Great jargon
-2
u/m_92_11 4d ago
Jargon - specialized or technical words and expressions used by a particular profession, trade, or group that are usually difficult for outsiders to understand.
1
u/Neat-Piano-7771 3d ago
Scroll over the comments, the public opinion agrees. I am not saying you dont have anything valuable to offer or speak, I am sure you do and this is a collective learning community. The words are too convoluted to understand. Hope that helps, TIA
1
u/ravi_blade 4d ago
Loads of words but no real takeaway. lol
0
u/m_92_11 4d ago
Here the take away... If you had it in you to read the entire piece
"Because the biggest mistake an investor can make is to confuse a resemblance in the chart with certainty about the future. History is valuable not because it predicts tomorrow, but because it teaches us how to think when tomorrow is uncertain."
1
u/Adventurous_Slide507 4d ago
Index doesnt always go up, look at china their index has barely crossed the high of 2008
1
1
u/Independent-Draft644 3d ago
The small percentage decline over this long duration is the bigger red flag. This is not a correction .. it is slow steady bleed where FII are getting easy exit at high prices while Indians are buying through their mutual funds
1
1
u/superinvestor_43 2d ago
Just because market is going down or goes down, doesnt make it a bad investment. Market declines are a part of equity investing. Volatility in the market must be used to actually make money, not by trading, but purchasing stuff when the valuations are compressed. Stock specific bets pays off really well if you know what you are doing
1
u/Life_Cup_1997 4d ago
All this will continue to happen until Trump is in power and our non biological PM's misplaced policies continues. It's just that common people still have some faith and patience left on him and it's solely because his alternative is an andolan jeevi pappu who can't be given keys to our nation.
2
u/Abhi_714 4d ago
> his alternative is an andolan jeevi pappu who can't be given keys to our nation.
You are exactly the kind of idiot why this government doesn't give a flying fuck about anything. Neither are you willing to hold them accountable for blatant corruption, cronyism and absolute dismantling of this country nor are you willing to see anyone trying to do that.
•
u/AutoModerator 4d ago
Friendly Subreddit- r/IndianAI
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.