The last 10 trading sessions have been largely dominated by market bears. During 8 out of the 10 trading sessions, the markets have slid lower. Put together, the BSE-Sensex has lost about 1,648 points (down 5.7%) during this period.
But if you go lower in the hierarchy, you will notice that the correction is much steeper in the midcap and smallcap space. For instance, the S&P BSE Smallcap index is down 9.3% over the last 10 trading sessions. Many stocks in this space have witnessed a massive fall in their stock prices.
Suddenly, market participants who were enjoying the fast-paced rally in these stocks are finding themselves on a wrong footing. When stock prices were sky-rocketing, they didn't care much about valuations. And now when prices are correcting, they are trying to find the quickest exit.
So what should you do now?
If you are a speculator, then you may be in for a rough ride as the markets are likely to remain volatile we believe. However, if you are a long term investor then this correction should bring a smile on your face. The ongoing correction may throw up some solid investment opportunities at attractive valuations. So be on the lookout for solid businesses that have sound long term prospects. And make use of the market correction to load up such companies in your investment portfolio. The best way to go about it would be to make staggered purchases through the correction period and have a well-diversified stock portfolio.