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Buying the Stock Market Dip? 66% Just Said Yes...

Jun 15, 2022

Massive falls on the Indian stock market have become so frequent these days.

Remember the common saying, "Markets take the stairs up and the elevator down". This is exactly what happened at the start of this week on Monday.

Indian share markets tumbled around 2.5% while the fall in individual stocks was far deeper.

The current fall in Indian share market is largely driven by changes in the macro economy.

Sustained FII outflows, increases in interest rates coupled with quantitative tightening, has driven correlations across asset classes and we are seeing selloffs across the globe.

There's no doubt that investors and traders alike are worried. After all, who would expect the Nifty to fall over 400 points in a single day!

So, the big question now on everyone's mind these days is what they should do in this market?

To understand what our readers are thinking, we ran a poll on Equitymaster's Telegram Channel this morning.

Here's what we asked our readers.

Given the sell off in the market, I am...

  • Sitting on sidelines, waiting for lower levels
  • Starting to invest in beaten down but fundamentally strong stocks
  • Going all in as I believe the market is near the bottom

With a response from over 850 participants, here is the final result:

51% say they have already started to invest in beaten down but fundamentally strong stocks.

Not surprising, right? After a fall of this margin, you'd expect there will be enough optimism...

If you're on the lookout for beaten down stocks which have good fundamentals, we recommend you check the below articles to get a head start.

Coming back to the poll...

A large chunk of investors are also waiting on the sidelines...waiting for the stock markets to correct some more.

33% from the 863 people believe the markets can correct some more and give them a better entry.

They believe the volatility is likely to persist and prefer to buy at even lower levels.

Observing the market and how the situation unfolds is not a bad option in our view as the Russia-Ukraine tensions, sustained FII outflows, and inflationary concerns unfold.

At last, we have some people, 16% to be exact, which are pure optimists.

These investors appear to be making the most of this opportunity and have committed their maximum allocation to stocks.

They believe the markets have bottomed out and this is the perfect time to go all-in.

Interesting results, right?

Two-thirds of the people are buying while 33% are still waiting for some deep correction.

The enthusiasm is strong as many good quality stocks are taken to the cleaners.

While this is a good opportunity to double down on your investments or even put some fresh funds in the market, you should keep your head on a swivel.

This means be wary of the market trends and what's happening globally. Indian benchmarks follow global market trends, so it's better to stay updated on how global markets are performing.

We understand that the stock market and fundamentally strong stocks falling is not fun. The best investors out there know that controlling emotions in these moments is of utmost important.

So constantly revisit and re-evaluate your investment thesis. Ensure you are willing to change your mind when the information changes.

If you do this, your heart, mind and portfolio will thank you over the long run.

Happy Investing!

PS: We recommend you check out our brand-new initiative - the new and improved Investor Hour Podcast. Called the Mint Equitymaster Investor Hour, this weekly podcast brings to you the sharp insightful market views of the leading gurus on Dalal Street among others.

You can check out the episodes below:

Saurabh Mukherjea on Investing, Life, Family and Fraud

Ramesh Damani on Compounding, Making Rs 100 Crores, Next Stock Market Leaders

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Yash Vora

Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.

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