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Below the Weekly Quote on Market by Krishna Appala, Sr. Research Analyst, Capitalmind Research

"The Indian markets have seen a broad-based decline, with the Nifty 50 down 15.6% from its 52-week high, losing 2.9% in the past week. The sell-off has been sharper in the broader markets, with Nifty Midcap 150 down 21.1%, Smallcap 250 down 25.6%, and Microcap 250 slipping 26.2% from their highs. The last week alone saw small and microcaps falling over 5-6%, reflecting investor risk-off sentiment.

Looking back at past corrections - whether it was Lehman’s crash, the Taper Tantrum, Demonetization, or Covid - these periods always appeared as strong buying opportunities in hindsight. Today’s correction may feel painful, but history suggests that years from now, it will be viewed similarly. Over the past 30 years, markets have fallen over 20% in multiple years, yet ended positive in 22 out of those 30 years. Market discipline matters in tough times just as much as in strong ones, and achieving long-term returns isn’t a straight path - it includes periods of steep drawdowns and sharp recoveries.

On the macro front, conditions remain stable. Fiscal deficits are under control, tax cuts are expected to boost consumption, inflation is low at 4.31%, and rate cuts have started, which should support economic growth. Domestic investors continue to pump money into mutual funds, offsetting some of the foreign selling pressure. While it is impossible to predict an exact market bottom, excessive negativity often signals a turning point. Markets do not move in a single direction forever. Despite the short-term sell-off, the combination of strong macro fundamentals, robust earnings growth, and attractive valuations makes this an important period for investors to focus on the long-term opportunity rather than the immediate volatility."

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