Market corrections are a normal and recurring feature of equity markets, often driven by liquidity tightening, valuation excesses, or macroeconomic shocks. Investors who focus on fundamentals, risk management, and long-term discipline historically benefit more than those who react emotionally to short-term volatility.<\/p>\n
Market corrections are an inevitable part of investing. While bull markets generate optimism, corrections test investor discipline and expose weaknesses in portfolios and investment strategies.<\/p>\n
India\u2019s equity markets\u2014represented by benchmark indices such as the National Stock Exchange of India<\/span><\/span> Nifty 50 and BSE Limited<\/span><\/span> Sensex\u2014have experienced several major corrections over the past two decades. These include the 2008 global financial crisis, the 2013 taper tantrum, the 2020 COVID-19 crash, and various liquidity-driven corrections.<\/p>\n Despite recurring patterns, many retail investors repeat the same mistakes during every correction cycle.<\/p>\n Understanding lessons from past corrections can help investors protect capital, avoid emotional decisions, and build stronger long-term portfolios.<\/p>\n A market correction typically refers to a decline of 10% or more from recent highs. Corrections occur due to:<\/p>\n Valuation excesses<\/p>\n<\/li>\n Economic slowdown<\/p>\n<\/li>\n Interest rate increases<\/p>\n<\/li>\n Liquidity tightening<\/p>\n<\/li>\n Global financial shocks<\/p>\n<\/li>\n<\/ul>\n According to the Reserve Bank of India<\/span><\/span>, liquidity conditions, interest rates, and financial stability are key drivers of asset price cycles.<\/p>\n Corrections are healthy because they reset valuations and remove speculative excess.<\/p>\n
\nWhat Is a Market Correction?<\/h2>\n
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\nMajor Market Corrections in India: Historical Overview<\/h2>\n