India Market Crash: Today’s correction is just a reminder of how equities work

There are sectors that remain sustainable and promising, regardless of the election outcome.

The market is buzzing with uncertainty after election results threw a curveball at the widely predicted landslide victory for the current government. This unexpected outcome has left investors feeling unsettled, with disappointment echoing through trading floors.

Now, there are a few critical aspects to watch closely. First, what kind of coalition or government formation will we see in the next couple of weeks? Second, who will helm the crucial portfolios? And third, how will the urgency and ability to push through tough reforms fare? The strong narrative around the Modi government has been a major factor in market re-rating, but that narrative now seems a bit shaky. This uncertainty has nudged the already expensive market into correction mode, and this trend might linger for a while. But rest assured, these uncertainties will fade, and the focus will shift back to fundamentals. Until then, markets are likely to be driven by sentiment rather than solid fundamentals. So, a bit of caution wouldn't hurt right now.

The important thing to remind ourselves though is the fact that this is not the first time market is rocked by bad news. Shocking events have led to sharp market corrections before, and as things normalize, these moments often have proved to be great entry points for long-term investors. Rational, sensible investors can use this as an opportunity to look beyond the current turbulence and spot good opportunities in the chaos.

Here again, it’s not about finding the right company that has growth potential but waiting for the right price to emerge. Valuations matter, and at the end of the day, it’s all about finding the right price point. If a company starts looking attractive due to this dip, it makes sense to reallocate. That’s exactly what we’ve been doing. We're focusing on businesses that are independent of these political events and are merely getting hit by the poor sentiment.

There are sectors that remain sustainable and promising, regardless of the election outcome. Pharmaceuticals, autos, banking, and insurance are looking particularly appealing. Today’s correction is just a reminder of how equities work. Corrections can be sharp and deep, and often catch us off guard. But long-term investors know these moments are perfect for increasing allocations. It’s a strategy that has always worked well.

We always advise investors to use Systematic Investment Plans (SIPs) during high points, but when events like this shake the market, it's time to be bold and allocate more lump sum investments. Events will come and go, but solid companies will sustain for the long term. That's the key takeaway.