Is the market valuations attractive for long-term investors?

“This is not the end of investing in equities. We have seen such situations many times in the last couple of decades. As regards the COVID-19, one now needs to monitor fresh cases in the US, Europe and India. Developments in these geographies will decide the markets trajectory from here. Typically, when the markets fall so fast, there is some support once they slip around 25 to 30 per cent from the peak—and that’s where we are right now in terms of current market. The biggest correction phase in history was around 60 per cent fall from the top in 2008 during the GFC. The corresponding level now works out to be around 6,000 on the Nifty, which should act as an absolute support base,” says experts.

 As per the available data markets usually rebound the most in three-six months post sharp corrections. Except for one instance during the tech meltdown of 2000 markets have delivered positive returns in the subsequent 12-month period.

“On an average, it takes about 156 days between the peak to trough – the lowest has been 35 days in 2006 and the highest 410 days in November 2010 – December 2011,” said experts.

As such the sharp fall in the Indian markets from their peak levels has made valuations attractive for long-term investors, analysts say.