Art of Surviving, Thriving in market

I have often felt that for all the positive domestic retail investor numbers that were being reported regularly over the last several years, the real test for the Indian equity market would come in case of a longer than usual, if not prolonged correction in a market that has been on a one way rising trend since the early Covid days, almost five years ago.

And that moment may well have arrived. Before looking at how one might want to react in a sliding market, let us first look at why it turned into one. For a long while, valuations have been running far ahead of performance and the Q3 results were a wake-up call about the wide lag in performance versus valuation in the market.

That it coincided with US Court strictures on promoters of one of India’s largest business groups hardly helped matters as Foreign Institutional Investors (FIIs) commenced an exodus of sorts from the Indian bourses. The impact of their rapid selling of mega large caps was seen on the Indian market indices that went into a tailspin.

While resident investor inflows helped the Domestic Institutional Investors (DIIs) to offset the relentless selling by the FIIs to some extent and circumvent a vertical fall at the Indian equity market, it became clear that the market was on a slippery slope. The markets are still shaky and volatile and will remain so until quarterly numbers improve significantly and value returns to the market.

Meanwhile a strong dollar is keeping FIIs invested in the US market, but they will have to return eventually. The Indian market and economy are now too big to ignore indefinitely anymore. But when the FII money will return to the Indian bourses would be is anybody’s guess.

Let us be clear about one thing —- 2025 is not a year for the weak hearted at the Indian equity market. Remember, those that fear seeing Red must not be in the market as market cycles are part and parcel of every equity market.