Indian Stock Market: Is it time to Exit the Stock Market? EXPLAINED
Is it time to exit the stock market?
The Indian stock market has been experiencing a downward trend since September 2024, with the Nifty 50 index correcting from a record high of 26,277 to 22,124, logging a 4,153-point or 16% dip. The BSE Sensex ended at 73,198, 12,780 points or 15% lower than the record high of 85,978. The broader market has also seen a significant sell-off, with the BSE Mid-cap index nosediving over 22% and the BSE Small-cap index crashing around 25.50% from its lifetime high.
Expert Insights
"It’s not about timing the market, but about being in the market," says Anshul Jain, Head of Research at Lakshmishree Investment and Securities. "When the market is volatile, it’s time to become an investor and save money. Trading is advised when the market is in a bull trend or a bear trend. In a volatile market, one should invest in cash and maintain a strong stop loss after taking any position."
Vivek Sharma, Investments Head at Estee Advisors, echoes similar sentiments: "Markets deliver asymmetric returns. There can be long periods of stagnation followed by short bursts of hyper-performance that, on average, drive returns. Missing these bursts while trying to time your entry or exit can be costly."
Is it time to invest in the stock market?
According to Akriti Mehrotra, Research Analyst at StoxBox, "The market has witnessed a sharp fall in recent trading sessions, providing a perfect opportunity to increase one’s stake in equity markets. However, before accumulating in stocks, investors should closely monitor several triggers and potential risks in the market."
Stock Market Strategy
Gaurav Goel, Founder & Director at Fynocrat Technologies, advises, "Even in a declining market, not all stocks are undervalued. Investors should focus on PE ratios and earnings potential before accumulating positions. Instead of unthinkingly investing in the overall market, identifying individual stocks with strong fundamentals trading at reasonable valuations is a better approach."
40-30-30 Rule
Gaurav Goel also advocates for the 40-30-30 rule, where investors deploy 40% of capital at the first sign of deep value or market correction, 30% at a further decline, and 30% when signs of recovery emerge. This approach helps manage risk effectively.
Is the SIP approach better in falling markets?
Mohit Khanna, CFP at Purnartha Investment Advisors, believes, "Investors should keep investing methodically, periodically via SIP. While the returns profile of the equity asset class is lumpy, investments don’t have to be lumpy. Investors should win over their penchant for ‘catching the bottom’ and follow a disciplined approach of investing at all levels to generate wealth over time."
Conclusion
The Indian stock market has been experiencing a tumultuous period, with many indices correcting sharply. While it’s natural to feel concerned, experts advise that investors take a step back, assess their strategy, and maintain a disciplined approach. By doing so, investors can navigate the challenging market conditions and achieve their long-term financial goals.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
Live News Daily is a trusted name in the digital news space, delivering accurate, timely, and in-depth reporting on a wide range of topics.