Nifty has closed on the weekly expiry on 17-Oct-24 at 24,749 i.e. day fall of 0.89%. However, a panic was felt with fall of 3.54% in Automobile Index followed by most other Indices falling by 1% to 3.8% including Nifty Bank, Financial Services, FMCG, Media, Metal, Private Bank, Realty, Healthcare, Consumer Durables, and Oil & Gas.
In the contrast, the IT index was the only sector to post gains, ending the day at 1.2% higher amid the broader market decline.
The Trigger: There is no new internation trigger for a widespread fall in Indian indices. This downturn can be attributed to weaker sales forecasts for the festive season, high NPAs and slow credit growth. Weak Q2 Results (e.g. Bajaj Auto -14.8%, Nestle, Havells, etc.) are affecting the market sentiment. Conversely, the IT sector outperformed as a contrary bet and in-line Q2 results.
When every one was talking about one way rally in Market, until very recently, it has given a sense check to the investors. It has witnessed sharp 6% downfall from NIFTY hitting high of 26,277 on 27-Sep-24.
Is it a major correction? Is it a material risk to our investment? Should we adjust the investment? Or should we hold on for the rally to continue?
Till very recently, all the rally was justified with rationale and data of large SIP Flows. Market analysts were using all the data of 1L+ Crores of Cash sitting with MF Mangers for investment. Bulls started justifying the HIGH PE Ratio against the economic growth and then with future growth potential. All the Bears had exhausted giving revised levels from where market will for major correction. Even Bears started changing their market view.
Lets understand, that the Bullrun from 19K-19.5K in Oct’23 has already given about 38% returns point to point so far within 12 months. Market has seen about 130% returns point to point From 11K-11.5K in four years from Oct’20 i.e. CAGR ~23% on INDEX!!
In conclusion, some correction is not just OK, but rather much needed for Bullrun to continue and HIT new highs. Generally, 5% correction is considered to be good healthy correction for bull run to continue. Current Panic Is Offering Opportunities For Smart Investors.
Market is at crucial level of breaking a strong Head & Should chart pattern. If closed for two more days in negative and breach 24,400, it may fall further to levels of 24000-23500. Any deep correction to 22500 levels is NOT in the sight as of now.
Do Watchout, Q2 results closely where a K-Shape recovery is possible.
As smart Risk Mitigation Startegy, at this stage would be stay Neutral and keep positions light until the movement from current levels of 24700 is clear on either upside or downside. Smart investors can delta neutral in their position and use Beta to hedge the portfolio using Derivatives
Most Important, don’t Panic as Long term India Growth Story is very much intact. Use the market volatility to pump up the returns on you portfolio.
Keep Investing in yourself! Cost of Upskill is always less that Cost of Ignorance!!
