The State of the Share Markets in the 2018, 2019 years

Since mid-Jan 2018, the market went into tailspin. Started falling faster. FIIs pulled out in volumes daily.

Largecaps, midcaps, smallcaps and all fell badly. Although largecaps recovered very well quarter after quarter, the smallcaps got devastated quarter after quarter.

As the year passed, I thought there were very few stocks that were doing good and that too with time they too fell. While it is true, I also thought largecaps are doing good as NIFTY kept hitting new highs every six months.

But in mid of 2019, I noticed that many good stocks of the past were devastated. Inlcuding those in large cap segment. This was unexpected. It is a slow and painful crash happening from 1.5years.

Many smallcaps got devastated losing 80% or more from the 2018 highs. While some survived and even made new high through mid of 2018, they too fell badly. It was hard to understand which was relative gainer and which was relative loser.

Now the picture I got about the market is that there is a negative sentiment all around. While NIFTY continues to hit new highs every six months, only few stocks are helping NIFTY. But many stocks are surprisingly deteriorating in fundamentals. It is not hard to see why that is so. Despite the close to 7% GDP growth, there are bad NPAs for banks. The devastation of DHFL and YES BANK, then Jet Airways default, show signs of slowing down and bad situation of many banks. Almost every bank in the country is affected by NPAs. Despite that SBI shares are touching new highs.

DHFL, YESBANK, Jet Airways are not the only stocks that got devastated. PCJeweller, Vakrangee are not the only ones that went down to hell. AIFL from my portfolio went down from 500 levels to sub 3 rupee levels recently. It was the only one that fell lesser in the first half of 2018 and I was glad to have sold it in August. The devastation was followed from the last week of September.

That's not all. While there were some stocks across the board that got devastated with 80% or more fall, many stocks across the board have lost and kept losing sequentially quarter after quarter. This does not mean there are some shares left not losing but rising through this 1.5 year. Maybe very few. Even those that rose in between like WSTCSTPAPR, LINCOLN, have gone down to new 52 week lows in the subsequent quarters. That's why it is getting quite harder to trade stocks in this prolonged season of downtrend.

The worst mistake I did in all this was to ignore my SIP strategy and look for single sample trading and then holding as investment to see capital erosion. I keep getting reminded back to what I had learned and how I had devised a very effective SIP strategy in the prior years starting from FY2013-14. If I had done that I would have still had losses instead of profits but that would be very minor.

I certainly didn't have a solution for a scenario of long downtrend like this. However in all the past years, I had the record of closing out positions that turned bad due to my intuition that helped me sense atleast in the middle of a downtrend. Knowing that the market across the board and timelines is bad through this prolonged period, gives me some respite. I cannot keep on beating myself for every scenario that unfolds and ruins my carefully built positions. This time just ain't right. It is prudent to cut down exposure and keep learning.

Now there are two things in front of me for the future. Trading for faster gains so capital can be compounded faster. And investing for long term with the same SIP strategy that I had carefully developed over the years after considering various scenarios. The first thing seems like a distant dream. It may work in a decent market even sideways but not so in current market. The second thing is not so exciting thing to do. But it is the least one should do.

The thing that scares me most is this. Unlike most endeavors this one has the potential to set you back to zero or where you had started, at any point of time in the future. For some simple mistake (like holding stocks for only a month after they started falling fast) or some unknown rule introduced by SEBI or the govt. But I keep finding some filters to avoid doing some things and to do some things to not run into such a risk. For every profession there would be some principles we learn from experience and intuition. Those should be followed strictly. I am again looking to note down those like I did last time around 2012 time.