How To Make Profit From Market Corrections

How To Make Profit From Market CorrectionsThe term “market correction” can instill fear into some stock market investors. For others, a correction means fresh share buying opportunities.

Correction is a realistic scenario for stock market participants. After every bull run, a correction has to happen. It’ is often discussed, debated & analysed and forgotten when the trend turns positive.

First and foremost, corrections doesnot indicate any market direction ie they  just dont happen on the downside. There are upside market corrections and downside corrections as well. So if we define a correction, it is a correction of the trend. And a trend can be up and down.

How to make profit from the correction is the main discussion to discuss. Normally when a correction happen, if Nifty falls by 10%, mid caps counters & by some means even the large cap counters are available at 20% discount. A investor must treat it as a “END OF SEASON SALE”

But the point is, he must identify the counters which are

  • fundamentally sound
  • Showing constant EPS Growth of over 20%
  • Bright Future Prospects

Take a example. Looking at the current scenario, one should look to accumulate picks like IDFC available at 35% discount, Lupin available at 20% discount. One poor investor would always go in for buying stocks like Unitech, DLF, DB Realty just because they are available at 70% discount. That is where the retail investors get caught. They want to earn too much in small period of time. Suppose, they want to buy Unitech @ Rs 35 & expect to double its value in months.

Without considering the fundamentals of real estate sector where they are not getting loans from banks, one should always learn to invest in good stocks that may be available at less discount as compared to other stocks

Thanks ;
Mr. Mayank Gupta, MBA Finance,  CRISIL
Wealthbazaar.in
9967052367

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