Icon times
What are the Lessons Investors Should Learn from Bear Markets?

What are the Lessons Investors Should Learn from Bear Markets?

Published on 07 June 2022 .Views 22 .Comments 0
Share On

The benchmark index Nifty 50 touched its 52-week high levels of around 18,604 on the 19th of October 2021 and is currently down by around 13%-14% to the levels of 16,420. The foreign markets are currently in the bear grip, while Indian markets are slightly away from entering the bear phase. So, in this article, we will be discussing what are the learnings an investor should learn from the Bear Markets that the Indian Stock market has witnessed in the past.

What is Bear Market?

A bear market is a situation when the stock market experiences price declines over some time, when an index is down by more than 20% then it is called a bear phase.

4 Bear Market Cases:

  1. May 2006 to June 2006- In this Nifty was down by almost 30%. FII has made disinvestment of Rs. 6, 828 crore rupees and the domestic investor has invested Rs. 5,917 crore which means DIIs almost cover the gap.
  2. January 2008 to October 2008- Here, Nifty was down by the highest percent, the difference between investment and disinvestment was Rs. 37,610 crores this was the reason that market was down by 60%. The gap wasn’t able to maintain by mutual fund investors.
  3. March 2015 to February 2016- The market was down by 23%, and FPIs has done the selling Rs. 27,979 crores whereas the investment made by mutual funds investors was Rs. 80,284 crores. It was a golden time for the mutual fund as SIP as an investment option started becoming popular from that phase.
  4. January 2020 to March 2020- We can also say Jan 2020 as within one month the market was down by 38%. The gap between buying and selling was not huge but in the month of march both FPIs and mutual funds have done the selling, this is the reason a crash has been seen in the market.
  • The current phase is not a bear phase the nifty is not down by more than 20%. Nifty is only down by 13-15% till now from Oct 2021. The total outflow by FPIs close to Rs. 2,04,256 crores and inflows by mutual funds till April 2022 is about Rs. 1,40,762. The outflow made by FPIs is huge but the markets are still looking rocksteady. The favorite index NASDAQ is also down by almost 30%.

Learnings:

  • Even though the huge disinvestment made by the FPIs, the market is not in the bear phase which means, the market is still strong.
  • All four phases were the glorious phase of investment, that is why systematic investment shouldn’t be stooped.

What should the investor do?

Discipline in investing is very important, an investor should follow their investment plans and not get distracted by the ups and downs of the market. Before investing always do a deep analysis of the stock and make a strategic investment.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.

Originally Published On:https://blog.investyadnya.in/what-are-the-lessons-investors-should-learn-from-bear-markets%ef%bf%bc/

Attachments:
private article suscription area icon

You like to know more. We like that!

Please subscribe Model Portfolio Plan to get access of all premium model portfolio articles Only at Rs. 9,999.00/Year.

Please login to view this free article.

This blog is available only for logged in users, please register and get access to view this article.

Recently Uploaded

premium Premium
free Free
Chat on WhatsApp
Caret UP Arrow
InvestYadnya Support
Typically replies in minutes
InvestYadnya Support
Hi there
Welcome to InvestYadnya.
We are available to assist you on WhatsApp.
Please click on the button below to chat with us.
(10 AM to 7 PM IST)
16:10
Chat with InvestYadnya