'Exit now with losses or ignore...': Financial planner on how to survive market crash

Following a period of market decline, Benchmark indices rebounded on Thursday, closing in positive territory for the second consecutive day. Sensex concluded at 74,340.09, marking a gain of 609.86 points or 0.83%. Nifty also showed strength, finishing at 22,544.70, up 207.40 points or 0.93%.

In contrast, on Tuesday, the Nifty index experienced a notable drop for the 10th day in a row – the lengthiest losing streak in 29 years or since its inception in 1996. The index closed at 22,082.75, falling by 36.65 points or 0.17%. Out of the past 19 trading sessions, Nifty has only ended positively once.

The Nifty 50 index has experienced a decline, causing long-term gains to diminish. This has prompted a sense of concern among investors, leading them to question whether they should consider selling or holding onto their investments.

Market analysts are of the opinion that the recent decrease in market performance is expected to be temporary, despite its significant impact. 

According to CA Nitin Kaushik, historical trends in the market indicate that prime buying chances often emerge when investor confidence is at its lowest. He suggested that during periods of heightened fear, stocks can be acquired at discounted rates. 

By gradually increasing investments in solid businesses during such times, investors can potentially reap substantial profits when market conditions eventually improve.

"Tough Choice in the Stock Market? 📈You have two paths ahead:
❌ Exit now with losses, never return, and struggle financially forever.
✅ Stay invested, ignore the noise for 6 months, and build lasting wealth.
Most people fail in the market because quitting is easier than enduring the pain. 
•Fear makes people sell low.
•Patience makes people rich.
The market rewards those who can sweat through the hard times. Will you be the one who bleeds or holds strong," Kaushik wrote on social media X.

Earlier this week, Nithin Kamath, CEO of Zerodha, provided valuable insights for investors who have started investing post-pandemic and are now experiencing their first significant market downturn.

In a LinkedIn post, Kamath emphasized that market corrections are a natural part of the investment cycle, especially after the rapid growth seen in late 2020. He highlighted the importance of continuing systematic investment plans (SIPs) even during market downturns to ensure long-term growth. Kamath advised investors to average their investments across market cycles, both during uptrends and downtrends.

Recent data from JM Financial revealed a concerning trend of investors pausing their SIPs, with the stoppage ratio reaching 109% in January, the highest since April 2023. Kamath urged investors to stay committed to their SIPs to benefit from market fluctuations and achieve steady growth over time.

Kamath emphasized to investors that in 2020, stocks across different market caps experienced significant drops of 25-40% followed by impressive rebounds of 200-400%. He advised against making hasty decisions during market downturns as it could result in missing out on potential future recoveries.

Market recovery

According to Axis Securities, the market is approaching a medium-term bottom and investors are advised to distribute a portion of their long-term capital within the Nifty range of 21,700 to 22,000. 

“While a clear bullish trigger is yet to emerge, historical patterns, technical indicators, and sectoral valuations suggest that the market is nearing a medium-term bottom. Therefore, we would advise investors to allocate some long-term money between 21700-22000," Axis Securities said in its latest report, titled ‘India Equities Exclusive’.

The report stated that although it is challenging for most investors to predict the precise peak and trough of the market, wise investing involves seizing opportunities, particularly when market sentiment is overwhelmingly skewed.

The Nifty 50 benchmark has experienced a decrease of almost 16% from its peak in September, totaling 26,277. This marks the sixth largest drop from a significant high since the Great Recession in 2008-09, and the second largest decline since the crash caused by Covid in March 2020. As February concludes with a downward trend, the decline has persisted for five consecutive months, equalling a streak last observed in November 1996.