This time its no different

So, we have had one more day of Blood letting with markets showing no signs of bottoming out even though domestic institutional investors continue to Buy into the weakness, a weakness that has been caused majorly by global factors accompanied by ceaseless selling by foreign institutional investors.

Blood letting was a medical practise carried out as late as end of the 18th Century due to the belief that only by removing all blood could some of the ailments be resolved. The reason is survived so long was due to the faulty way its success and failure was calculated. If the patient survived, the blood letting worked whereas if the patient died, the catch was that the patient could not be saved even though blood was let. A kind of Heads I win, Tails you lose.

In the markets, blood letting is a ritual that is practiced every year. Investors who are strong survive to see another year while weak Investors just die never to come back again and will be replaced by a new breed of investors hoping to make a mark.

Markets are now down 18.43% from its peak but for many a investor, it seems as if the floor has given way. This could be due to the fact that the markets which topped out in early 2015 has been on a consistent decline ever since. Of course, this was not visible in the Mid and Small cap segments which till a few days ago were in a world of their own, but the flight of capital from Small Caps where the exit door is very small has made it similar to people trying to rush out of a single door when a room full of partying people suddenly realized there was a raging fire outside.

But the draw-down in itself has not been abnormal. Nifty has seen a average decline of 21.87% (even if you remove 2008 from the calculation) from the year high and in that aspect, the current draw down for 2016 is just 6.60%.

Every fall is a opportunity provided one is ready to catch the same when its available. In panics, investors (both retail and institutional) are so immersed in trying to get out that they are willing to sell Gold for a few trinkets  of Copper only if they can get ready access to cash. We are no way closer to that though a final long term bottom would see something similar. Hope you are ready when that happens.