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In addition to the first wave of the deadly corona epidemic in 2020 history, a large number of new investors who jumped into the stock market, who made huge profits by investing in the fall, will also be remembered. In 2020-21, Nifty-50 gave a return of 55 percent, which was the highest in 11 years. Earlier, in 2009, investors had earned 60 per cent.
It is worth noting that the historic recession, inflation and unemployment in 2008 brought the world to its knees. Looking at the markets at present, there is an environment of volatility. Whether it is rising inflation, interest rates, shipping costs or labor shortage and changing policies, the tug of war between bulls and bears is also adding to the concerns of investors.
Reform is part of the investment process
Correction in the market is part of the investment process. The investor community is fully aware of the post inflation crisis in 2008 and the post-pandemic correction in March 2020. This is not the first time the correction seen in the markets in the current era. In 2006, there was a 30% correction in the Sensex and 50% in the small cap index in one month. Then the Sensex climbed to 21,000 by January 2008. Investors got 135% returns in 20 months.
hard to guess the right time
It is said about the market that its ‘right time’ cannot be estimated. However, a sensible investor must look at the past of the market and analyze it and try to guess the correction from the available information. In this context, the struggle between small and midcaps in 2011-13 was more or less similar to that of 2018-20 over the past decade.
- n When the stock fell, many investors considered it as an opportunity, which gave rise to the markets.
- n The corrections in 2013 and 2020 after the fall in 2011-13, 2018-20, resulted in the strengthening of the markets in 2013-15 and 2020-22. Then profit-booking and other factors further declined in 2016 and 2022.
Advice…buy shares for a fixed period by planning
Markets continue to remain volatile due to prevailing geo-political tensions, rise in interest rates and inflation. Well, markets always complete a cycle. In some circumstances, it is as important for them to go down, as important is to pick up the pace back.
- Every downtrend creates opportunities for the market to climb higher. For the time being, investors would be advised not to make huge investments in one go.
- Make a plan and buy shares for a fixed period because no one can tell the exact time of the market.
- Every investor should systematically focus on investing in stocks with a good balance sheet.