India suffered its capitulation-like fall in June / July when the market fell 20% in a month. At that time, composite sentiment indicator dipped into fear zone. Since then, India has outperformed emerging markets and risen 11% in absolute rupee terms. Even though sentiment remains fragile, it is currently outside what we define as fear territory.
The components of the sentiment indicator that are particularly weak at this point in time appear to be value-at-risk and price relative to 200 DMA. Other metrics are mixed indicating a bearish sentiment with market’s low point behind us for now.
What History on Dalal Street has to say ?
The market hit its bottom on 16 July (12,515 on the BSE Sensex), previous bear markets show that the market almost always tests the previous low before a new bull market gets under way. This process of retesting took between 15 and 24 months in the previous three bear markets of the past 18 years whereas this market is only two months from its July low. The pace of the price fall to the end of this bear market could be significantly slower than what we have witnessed thus far.
As you are already aware that you get best returns for investments made during dark phases, continue to invest.