INSUBCONTINENT EXCLUSIVE:
Over the past two months, the Mumbai markets have been in a bear grip
The Nifty declined more than 14 per cent from its high, pointing to the vulnerability of Indian equities to the falling rupee, rising oil
prices, and widening trade deficits.
But long-term believers in the Mumbai miracle should not lose hope
Every time the index has fallen about 14 per cent in the past 12 years, the next three months have seen the benchmark recoup all the losses,
showed a study by Elara Securities
The only exception to this pattern was 2008-09, when the global financial industry had to ride out its steepest decline since the Great
Depression.
Currently, the Nifty has recovered about 5 per cent from its two-month low reached October 26
Since 2006, there have been 15 instances, barring the 2008-09 crisis, in which Indian stocks fell more than 10 per cent
During these deep corrections, on an average, the Nifty declined 14 per cent and the average duration of such corrections is 58 days.
After
each bout of corrections, the Nifty recoups most of the losses over the next three months, thus offering a 15 per cent return, according to
On these 15 instances, the Nifty reclaimed its peak in 11 within six months after each round of declines.
Two notable prolonged corrections
Periods of prolonged corrections were also followed by periods of slow recovery
In both instances, the Nifty took about 6 months to regain its peak.
There are four instances when the Nifty failed to reclaim its peak
Elara Securities.
Asian Paints, Britannia Industries, Colgate, GlaxoSmithKline Pharma, Kansai Nerolac, Crisil, Dabur, and Marico are some of
the leading stocks that have performed through the latest round of corrections.
