Markets Witness a Bull Run Correction, But Global Growth Remains Strong: Ramesh Damani
Markets Witness a Bull Run Correction : The Indian stock market recently experienced a sharp correction, leaving investors wondering whether this is the beginning of a downturn or just a temporary blip. According to veteran investor Ramesh Damani, this is merely a healthy correction within a larger bull run, and the global economy, despite some turbulence, remains intact.
During an interaction with CNBC-TV18 on March 24, Damani shared his insights on the stock market’s recent movements, the impact of US politics on globalization, and the outlook for investors.
Global Uncertainty: The US Elections and Economic Impact
A major topic of discussion was the United States’ inward shift, particularly as the country heads into the 2024 presidential elections with Donald Trump as a central figure. Damani believes that the election reflects a change in America’s economic and political stance, which could have global consequences.
“The world is not going left or right, but America is turning inward for the first time. And that has profound changes on the world. I feel the world is about to change,” said Damani.
However, he was quick to reassure that globalization might slow down but will not reverse. According to him, economic progress is inevitable, and even if Trump’s policies attempt to shield the US economy, market forces and democratic aspirations will eventually push globalization forward.
Stock Market Correction: A Natural Part of the Bull Run
Addressing concerns over the recent stock market dip, Damani maintained that this is a normal correction in an ongoing bull market.
“The first correction in about five years was severe. But by their nature, they ought to be short, sharp, and swift – like they are in the current scenario. It is just a correction in the bull market, not the topping,” he said.
One of the biggest indicators that this is not a bear market is that several stocks have continued to hit all-time highs, even as the broader indices declined. Historically, during bear markets, stocks across the board tend to fall sharply without such positive breakouts.
FII Selling: Should Investors Be Worried?
A common concern among investors is the sell-off by Foreign Institutional Investors (FIIs). However, Damani dismissed these fears, reminding investors that every seller has a buyer.
“Anytime there is a transaction in the stock exchange, there is a buyer and a seller. So, when there’s selling by FIIs, there is also someone buying,” he explained.
This means that while FIIs may be offloading shares, domestic investors—particularly retail investors and mutual funds—are stepping in to absorb these outflows.
Market Leverage and Government Policy: No Cause for Alarm
One of the biggest risks to markets is excessive leverage, which can lead to market crashes if not controlled. However, Damani reassured that there is no excessive debt buildup in the system.
Additionally, the Indian government has maintained fiscal discipline, ensuring that the market does not become overheated due to excessive liquidity.
“There is no reason to believe this is a long-lasting bear market,” he said.
Key Financial Ratios to Watch
Investors should track key financial metrics to gauge the market’s strength:
| Financial Metric | Current Value | Importance |
|---|---|---|
| Nifty P/E Ratio | 22.5x | Indicates market valuation |
| Sensex P/E Ratio | 24.1x | Higher P/E can signal overvaluation |
| FII Net Inflows | (-₹5,000 Cr.) | Negative means FIIs are selling |
| DII Net Inflows | ₹6,500 Cr. | Shows domestic buying strength |
| Market Cap-to-GDP | 105% | Above 100% signals fair valuation |
| Inflation Rate | 5.1% | Affects interest rates and liquidity |
What Should Investors Do?
- Stay Invested in Quality Stocks – Avoid panic selling and focus on fundamentally strong companies.
- Avoid Excessive Leverage – Keep a balanced portfolio and avoid overexposure to risky assets.
- Use Corrections as Buying Opportunities – Market dips provide opportunities to accumulate good stocks at lower prices.
- Track Global Trends – While domestic growth remains strong, global political and economic shifts can impact market sentiment.
Q&A: Quick Insights from the Article
Q1: Is this market correction the start of a bear market?
A: No, Ramesh Damani believes it is a short-term correction in a long-term bull run.
Q2: What impact does the US election have on globalization?
A: America is turning inward, but globalization will continue in the long run as economic forces drive progress.
Q3: Should investors be worried about FIIs selling Indian stocks?
A: Not necessarily, as domestic investors are stepping in to absorb the sell-off.
Q4: What should investors do during a market correction?
A: Stay invested in quality stocks, avoid panic selling, and look for buying opportunities.
Final Thoughts
Ramesh Damani’s insights provide a calm and rational perspective on market movements. While short-term volatility can create uncertainty, long-term investors should focus on fundamentally strong stocks and macro trends rather than getting caught up in panic-driven reactions.
As history has shown, bull markets climb walls of worry—and this time is no different. Stay invested, stay informed, and use corrections as opportunities rather than reasons for fear.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.