Friday, March 23, 2018

The bottom is falling out of the Indian stock market; should you sell now?

The bottom seems to be falling out of the Indian stock market. Re-imposition of LTCG tax (from Apr 1 '18) has badly dented bullish sentiment. Now, imposition of import tariffs by the US President has dented bullish sentiment in global stock markets.

Some experts are suggesting that this 'discount sale' in the Indian stock market won't last long, and investors should use the correction to buy. Others are suggesting that it is not a good idea to try and 'catch a falling knife'.

Small investors are in a quandary. Portfolio values are getting depleted on a daily basis. Is it better to sell and run? Or, hold and wait out the correction?

In a recent article in, Andrew Beattie has advised when to sell and when to hold. Read the article here.

Related Post
When should you 'hold' and When should you 'fold' a stock?


rk77 said...

Shouldn't one sell as the chart shows a Head and Shoulder pattern 06 Dec 2017-21 Mar 2018 or wait a bit more to see if the shoulder line is broken decisively?

Subhankar said...

The 'gap' formed on Fri. Mar 23 may be a 'measuring gap' - which means Sensex is already halfway through with its correction from the Jan 29 '18 top. The downward 'gap' formed on Feb 5 gave a better signal to sell. It may be a bit late to book profit now - as you will get only a 6-8 weeks window to start buying back again.

As a general thumb rule, if you have waited for technical confirmation of a H-S or Double Top reversal pattern to book profit - you have waited too long. For long-term investors, a good asset allocation plan usually starts giving 'sell' signals well before a market top.