Is it time to buy?

Week ended at low note with Sensex losing 295.30 and closing at 18,211.52. Nifty lost 87.50 to close at 5,458.95. Market had good run in the first few days but after that it went through a sideway and then finally ended week on a low note. Market has been in a downtrend for sometime and last week pull back rally bought the investors back but rally was cut short by Friday’s fall. There are mixed opinions about indian markets. There is lot of confusion right now which leads to these falls after every few positive days.

Market has already corrected a lot in last two months. Some further pain cannot be ruled out but at the moment there are many stocks which are trading at the discounted price. It is a very good opportunity for retail investors who have missed the rally before. In the past, we have seen how retail investors avoid market at these stages and join late when markets are close to their highs.  This phenomena was witnessed in the last uptrend which happened around october-november 2010, but retail investor didn’t had much chance to respond to that. Markets moved up so fast that by the time retail investor could have joined the rally, markets were close to their all time high and then they tumbled from there.

Same thing happened in 2008, when retail investors were invested heavely in markets and it went through the Bear run. Though smart traders always make money whether it’s a bull or bear run, but an average investor gets the beating in bear run. Indian markets have already rallied a lot and was overvalued. Many stocks had gone up irrationally. At the same time positive developments in major economies attracted a lot of money from emerging market.

So this time around, markets are again moving downward and one can expect a further downfall, it is time to start picking quality stocks at cheaper rate. Accumulate at each downfall and when market rise which will happen eventually, one can post significant gains. But don’t forget to invest systematically, never invest all of your money in one shot. Invest in installments and have a time frame.

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