Stock market correction is generally perceived to be the time for fresh entry or buying more stocks. Right? It is not only seasonerd investors but even the immatures ones also try best to time the market. Timing the market is basically making an assessment as to when the market is at its lowest point and is poised for a turnaround. It is a different matter that market has always rewarded those who spend long time in the market rather than trying to time the market.
Can you time the market this fiscal year? The reality is that even the most seasoned investors fail to time the market. More money has washed out in trying to time the market than the amount of money made. In his book, “The Illusion of Control” Jon Danielsson mocks the attempts to measure and predict the risk and time the market. Calling it ‘risk theatre’ rather than credible analysis, he maintains that to properly assess risk, we need to recognise that different investors care about different things, depending on their level of exposure and time horizon. Such accuracy looks impressive but bears little correlation to reality.
That said, any market correction at the beginning of a new fiscal year is generally seen as an opportunity for making fresh entry. This is also the time when businesses close their annual accounts and can assess how much they can invest the profits. The salaried class also get to know the increment and starts assessing cash in hand to invest. And everyone within the built environment of finance knows that corporate earnings start improving by the 3rd & 4th quarter of given fiscal year.
It is hence no surprise that across the spectrum of personal finance the questions being asked today are:
Is the low point of stock market at the beginning of the financial year 2025-26 opportunity to buy?
Should I enter the stock market now or wait for more correction?
Has real estate got into an era of time correction?
Has gold reached its peak price point or reach to a fresh high?
Which asset class would give best returns in this financial year?
How should I evaluate my risk-reward ratio?
The above questions are relevant not just this time but every time. It is intrinsiclely wired into the human mind to try to time the market and get the best returns. But the fiscal year 2025-26 promises to be different. It is a year when more than whether or not you can time the market the question that is more relevant is whether you can afford the market. Not many can afford to buy in today’s market; at least not those who are not reckless with money and gamble on every tip here and there.
The macro-economic outlook of India is bleak and money management of a large share of Indians exposes their risk profile. The average household in the country is today in a debt trap. Some economists even believe there is no middle class left in the country, where 95% population has absolutely no spending power. In the wealth hierarchy of India, a meager 1% rich are followed by relative poverty and absolute poverty. So, you have to assess your finances with a rational mind and not emotional mind.
Facts speak for themselves:
The RBI rings alarm bells against rise in unsecured loans and has called it high credit risk
The RBI has given stern warning of action against lenders who follow irregular gold loan practices
The RBI has raised serious concerns over the surge in unsecured borrowing and speculative trading in derivatives, calling it a worrying sign of “euphoria” in capital markets
Retail loan has increased from 4% to 11%
67% middle class have taken personal loans; the most expensive & tricky loan
25% middle class have taken both credit card & retail loan
Growth of demats accounts slowed down; demat accounts also getting closed
45% borrowers in India are sub-prime borrowers
48% of this sub-prime loan is for consumption
Credit & retail loan are at a 10 year high
With not-so-rosy economic outlook ahead, and where many economists believe recession (or prolonged spell of slowdown) is looming ahead, what should an average salaried person do now? Should he take advantage of stock market correction in recent times? Should one step-up SIP for sizeable returns in future? Most of these personal finance questions are more of aspirational questions. These aspirational questions also overlook the much-needed financial safety.
An average investor must keep in mind that stock market is a function of profitability. India’s corporate earnings are going down; domestic consumption has significantly slowed down; private investment is not happening; and geo-political developments are not favourable. It is hence no surprise that the FIIs (Foreign Institutional Investors) are also deserting the Indian market for greener pastures.
Personal finance tips for 2025-26
The sound advice in today’s economic outlook at the beginning of the fiscal year is to be debt-free. If at all you have a debt then evaluate whether your debt is leverage or liability. If you are earning more with the borrowed money than the interest being paid then it is leverage. However, investing with borrowed money, wahtsoever you may be earning, is a recipe of disaster. Post Covid stock market gains have lured many middle class Indians to gamble in the stock market with the borrowed money. Many of them have already paid the price with the market going down since Spetember 2024. The RBI too warns against such speculative gambling in stock market with borrowed money.
What is needed today is:
Assess your net worth; calculate assets minus liability
Get rid of debt trap; leverage your loans and get rid of liability
Have emergency fund; term insurance; and health insurance
Stock market investment should be with surplus capital and for a minimum period of 3 years
In terms of asset allocation, don’t put more than 40% in stock market
Last, but not the least, don’t get swayed with FOMO (Fear of Missing Out) when stock market, real estate or gold starts going up. Similarly, not every market correction is time for putting more money if it disturbs the balance of your portfolio allocation.
Ravi Sinha
X: ravitrack2media
Ravi Sinha is a journalist with over two decades of cross-discipline media exposure. He is the CEO of real estate thinktank group Track2Realty. He has been writing extensively on the real estate sector for more than a decade now. Evaluation of real estate brand performance is his core domain expertise and he has immense insight into consumers’ psychograph. He has conceptualised Track2Realty BrandXReport as India’s 1st & only objective & non-paid brand rating journal that is industry-accepted benchmark of brand equity & ranking of the Indian real estate companies.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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