When will Stock market Recover (or crash) |Russian Stock market

When will Stock market Recover (or crash) |Russian Stock market Stock market prediction stock analysis when will market recovered Russia vs Ukrain

So the markets are going to recover by 6 April 2022? Precisely. How do I know it? Because it is my birthday and that’s an auspicious day for the markets to recover. Okay, just kidding. Basically, the point of this bad joke is that no one knows when the markets are going to recover. But through this brief Article, I will share five specific logic driven points that will help you understand when our markets likely to recover fully and what the recovery might look like. And what are some of the challenges that might interplay during this time. If you read this Article carefully, you will get a very clear understanding as to what you should be doing in the market right now. Should you be buying, not buying in case the markets fall below, what is it that you should be doing? Understanding these macro steps is going to help you strengthen your portfolio. So please read This article very carefully and make notes.

I will speak in five very simple, easy to understand points. Point number one. It is very important for us to understand to what levels markets can fall.

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what levels markets can fall?

Now, very quick theory here that there are three types of corrections in the market. One is called as a minor correction. These keep on happening very frequently. These would usually be categorized as less than seven to 8% correction. Major corrections are usually between 10% to 20%. And then we have deep connections which indicates the start of a BEAR run. And here the corrections usually are more than 20%. So if we check the data for the US and Indian market, let us see what we find. So here is the chart for SNP 500. It indicates what is happening in the US market and you will see that the market fell by roughly 14.6%. So this was a major correction and then the market started recovering and it is backed up by roughly 7%. So the fall was 14 and a half percent back up by 7%.

Indian Stock market during Russia Ukraine conflict

Okay, so if we check the Indian markets fell by roughly 13% and they recovered by roughly 3.7%. Now why am I telling you these numbers? There is a method behind this madness and I would want you to take a look at this particular chart. Now, the source of this data is Goldman Sachs and what it indicates are the market corrections since World War II.

Now why am I telling you these numbers? There is a method behind this madness and I would want you to take a look at this particular chart. Now, the source of this data is Goldman Sachs and what it indicates are the market corrections since World War II. So this is a macro data and it indicates a range of things. For example, there are 26 corrections that have happened. Corrections? What type of corrections?

These are usually major corrections and the average decline of these corrections have been 13.7%. And these corrections have roughly lasted for around four months. Very important data point. Why? Because I telled you about the Indian index and US index.

Both were having around in terms of corrections by around twelve to 14%. And the markets have not been doing too well over the last few months. Now, please note that these are corrections. I’m not talking about the bear market scenario. I will show that to you in a minute. Right now, what we are going through in the market over the last few weeks, these are minor or major corrections. And the important point to note here is very simple that major corrections are usually around 13.7% average. We have hit that average. So prediction number one is that we are bottoming out.

Can the market solve further?

Of course they can fall further, no doubt about that. But the data tells us that we are very close to bottoming out and you should not try to time the market. Now, if you want to take some positions, now might be a good time to invest. Again, not investment advice. I’m just sharing what the data says. Now this brings us to prediction number two. Can the markets fall further? Because you will say that, Shivam, from the previous point, you established the fact that markets usually correct by 12-13 percent in a major fall. It has already happened. So

Can the stock market go down more?

The short answer is yes, it can, and it depends on a range of scenarios, especially around Ukraine Russia crisis. And here is a great chart for you. And this data has been provided by Bloomberg. If the essence of the story is that if the Russia Ukraine crisis further deepens, if the European countries act more sternly against Russia and Russia retaliates, that can hold the world trade and lead to bad, bad stuff in the macroeconomy, and that can further deliberate the market. So the word of the day today is deliberate date. So let me know, what does that mean?

So essentially, let us take a look at few key scenarios and you can Zoom out and read all the possible scenarios. One of the key scenarios that is being played out in the market is this, that European countries are going to put maximum sanctions on Russia. Russia will retaliate and they will cut off the European countries from its oil supply. Why is this such a major issue? Because if this thing escalates, it can create a lot of trouble in Europe and it can have spillover effects all across the globe. So let us very quickly understand this point. That is it likely to happen?

Not likely to happen, and the gravity of the situation. So there are two, three key areas I will point you to. One is take a look at this particular snippet. It categorically points out that Europe depends quite excessively on Russia for its gas supply. European Union relies on Russia for approximately 40% of its gas. At one point in time, it used to have other sources of gas procurement, but now it is heavily dependent on Russia. Germany, the largest economy in Europe, relies on Russia for more than half of its gas. Again, extremely dependent on Russia. And this is one of the key reasons why countries like Hungary, Italy, Germany are not imposing strict sanctions against Russia. So the point of this discussion is twofold.

Number one, it looks unlikely that major economies in Europe are going to impose strict sanctions against Russia. They cannot cripple Russia because Russia has a lot of ammunition in terms of retaliating. So therefore, my prediction is that the market should not fall too much. But in case any of these red scenarios happen right again, Zoom in and try to see this grid. Any of these scenarios highlighted in red pink. If these happen, then of course the stock market fall will be more.

How much more Stock market will fall?

How much more? This brings me to my third prediction. Now, since we are already in a major correction and roughly 13% correction has already happened, a deep correction is likely to exhibit in case any of those pink slash red scenario play out. So we are likely to see another 17% fall. Now, how did I reach that number? There is a chart for you and this data comes from Goldman Sachs and it indicates the bear market.Since World War II there have been twelve bear markets. So bear market means that more than 20% correction or deep connection has happened from its recent top. So the average decline has been 30% over a 14 month period and it takes 24 months to recover. So since we had a loss of 13%, if we have to move to the 30% Mark, we need another 17%, roughly speaking, as the fall. So the markets might fall by another 17% in case a red scenario occurs. And it’s very evident to the world that a recession is going to start only under that circumstances. I feel the markets are further going to fall by another 17-20%.

Now you’ll see Shivam scaring us. You’re talking about such end of the world scenario. No, I’m talking about all the possibilities and different prediction scenarios. And here is the good news. And let me go to the chart and try to explain this point to you. That when bear run happened in 2008, there was another bear run that happened here. You will see that this 2008 period had a W shaped recovery. It’s one point that the market fell, but how soon it recovered is another part of the equation.

So in 2008, it roughly took four and a half years for this recovery to get completed. In 2020, we had something called as a V shaped recovery. Right. So you can see this V figure and it literally took us months for this recovery to get completed. So the point or the moral of the story is that in case we move from this major correction towards the deep connection, there is a very high likelihood that the recovery also will be very fast. So in case you see recession happening. So please keep some liquid money at hand to buy more stuff. And in case a recession is coming, that will be a great time to aggregate a lot of stuff, because that is when you make the maximum amount of returns. But to complete this entire thought process, do I feel that the recession is going to happen? The answer is no.

Now comes my fourth prediction, that what will be the entire impact of a worst case scenario on a country like India.

Image credit Businesstoday.in

What will be the entire impact of a worst case scenario on a country?

So there are two, three key points that we need to understand that in case any of these pink/red scenarios happen, three key things are going to happen. One is that the world growth will suffer. No doubt about that. If Europe goes through a crisis, India, US, everyone will suffer in that crisis, no doubt about that. So the growth of India will also take a hit. This is point number 1.2. The inflation will go up. There is absolutely no doubt about that. This will also happen because of the fact that the quantitative easing will again take place. Government will print more money, interest rates will be cut, and we will move back to that 2020 scenario in India, especially. One negative point would be that because Russia might impose sanctions in terms of supplying gas to other European Nations, the oil prices generally will go up. It will go up high for India. India is a very big net importer of oil. Oil is used in literally every industry.

So industrial growth will also suffer a little bit. And it will have lingering impact on India’s economy, at least in short to midterm. So this brings me to fifth and final point, where I will summarize some of my key predictions and talk about what you and I should be doing as an investor. So point number one, do I see the markets falling? The answer is no, that I do not see it falling too much from this point on. But can I guarantee that? Absolutely not, because a lot depends on what Mr. Vladimir Putin decides, and no one in the world can guarantee what he’s going to do. So let’s assume the worst case scenario, that he further acts in a bad spirit and destabilizes the security of the world. Will we move towards the short term recession? The answer seems like a yes, that we will fall by another 15% to 20%. But the good news is that the recovery should be fast. The reason there is fairly simple. The world cannot afford to have another quick crisis in the making. In 2020, we had a major crisis just two years into it. If we have to witness another major crisis where the economy suffers for a very long period of time, the world just cannot afford it. So a round of quantitative easing will again start. Interest rates will be cut. So what you should be doing as an investor, you should at least go and invest a little bit of money in cryptocurrencies in case that scenario plays out because cryptos always go up whenever quantitative easing takes place. This is a fact not an investment advice. So assuming a moderate scenario where Russia decides to de escalate this entire situation, what is going to happen? We are going to recover very quickly. I think recovery has already started. The market is indicating that the crisis is bottoming out and so are the markets so we are already underway in terms of recovery and I will not be surprised that in the next few months we might be hitting that 18,000 Mark on Nifty again as an investor 2-3 points that I will leave you with. Number one please don’t stop investing. That will be the worst mistake that you might end up making but please keep some free cash at hand that in case some bad situation happens just keep 10% of your money in a liquid format and take some opportunistic bit in case some opportunity presents later. So this is the first key thing. Number two please avoid high debt companies if another round of recession happens high debt companies or companies that have taken a lot of debt a lot of high debt small cap and mid cap companies will go under. Therefore it is very, very important to be particular about the asset quality that you are purchasing.

FAQs Related to Stock market

what levels markets can fall?

Of course they can fall further, no doubt about that. But the data tells us that we are very close to bottoming out and you should not try to time the market. Now, if you want to take some positions, now might be a good time to invest. Again, not investment advice. I’m just sharing what the data says.

How much more Stock market will fall?

How much more? This brings me to my third prediction. Now, since we are already in a major correction and roughly 13% correction has already happened, a deep correction is likely to exhibit in case any of those pink slash red scenario play out. So we are likely to see another 17% fall.

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