Kaizen Capital

Even after the recent correction, which is more in the small and midcap stocks, yet small and midcap stocks index valuations are at lofty levels in recent years in comparison to large caps.

Currently, if you go through the companies more than the market cap of 10k Cr, then you will find out that a large number of stocks on the lower side of the market cap have started trading below 20% from their 52-week high, and as you go on upward toward the biggest listed companies, the situation is still not that bad, but there is also the start of the deterioration.

Does this dictate that the trend is reverting to downside after the stellar run of around four years or the market will make a bounce back?

Nifty 50 had its third consecutive negative closing week on the bourses last week, which occurred after 14 months of a long stretch period since August 2023.

But if you go through the recent history, whenever Nifty had three consecutive weekly closings, the next one-month returns had been positive except for two occasions out of nine times in the past five years, which seems normal because when everyone started getting bearish on the market, then the market had a habit of climbing the wall of worries.

Whether the market will tilt toward the positive returns in the next one month as per the historical trends or continue the downward trend that everyone is expecting from the long period of time.

This week Nifty 50 has a muted negative return of -0.40%, the third consecutive weekly return for the Nifty 50 since August 2023, which brings Nifty YTD returns to 14.4%.

Nifty CAGR returns are as follows:
1Y:27.2%
3Y:10.8%
5Y:16.5%

Nifty 50 is still currently trading at a PE ratio of 23.4, which is still on the upper quartile as per historical averages.

शेयर बाजार में अगर कोई शेयर 10 से 20 फीसदी तक गिर गया है तो बहुत सारे निवेशक और विश्लेषक उसी शेयर को खरीदने की सलाह देने लगेंगे क्योंकि वह ऊंचाई से गिरा है।

लेकिन जो चीज़ 20% गिरी है, वह 20% और गिर सकती है। जैसे बाजार में तेजी अधिक तेजी को जन्म देती है, वैसे ही मंदी अधिक मंदी को जन्म देती है।

जैसे स्टॉक महीनों और वर्षों तक लगातार ऊपर की ओर रुझान रख सकता है, उसी तरह, यह काफी समय तक नीचे की ओर भी रुझान रख सकता है।

इतिहास आमतौर पर उन सूचकांकों या शेयरों के लिए बहुत दयालु नहीं है जो अपने हाल के उच्चतम स्तर से 20% नीचे हैं।