Is the Indian stock market going to correct in December 2021?

Backdrop:

The markets globally have run up on optimism considering the fall in the number of Covid related deaths, increase in the vaccinated individuals and opening up of borders of different countries

Indian Benchmark Nifty 50 has risen more than 25% in the last 6 months

Despite this, there are analysts who are expecting some correction prior to end of 2021. Prominent among them is, Raamdeo Agrawal.

One cannot defy the natural law of the markets. Correction will happen. And whatever happens, a lot of guys will fall by the wayside and there will be nasty experiences. The IPO market will fizzle out. All these things happen and that is a part of the market cycle,

Raamdeo Agrawal
Raamdeo Agarwal Success Story -The Warren Buffet of India!
DeChairman of Motilal Oswal Group, Raamdeo Agrawal

Despite holding this view, he believes the correction will not be deep like 2008 when money was wiped out entirely in

  1. Speculative stocks
  2. Bluechip that are overvalued
  3. Companies that have a high dependence on commodities
  4. Companies that are leveraged
  5. Companies that have a high dependence on developed markets (IT/Pharma)
Stock Market Crash in 2008 that led to fall in indices by more than 50%

We saw a downturn in IT and Pharma stocks in 2015–17 where the stocks suffered due to policies owing to US Commerce Department of Commerce and USFDA.

Nifty Pharma index rises 2% as Sun Pharma, Lupin receive USFDA approval |  Business Standard News
Major Pharma Generic Players under the USFDA Scanner

With this backdrop well embedded in the mind, we can say with certainty a few things:

  1. Stocks that are overvalued and have deflated earnings will correct
  2. With Crude Oil prices on the higher side, the overall inflationary pressure can puncture demand recovery
  3. Protectionism of any form in the world can hit the bottom line of export-driven sectors like IT, Pharma, Textiles, etc.
Listen In: What's the link between Nifty and crude oil prices? | The  Economic Times Podcast
Crude Oil Impact on Stocks

Hope this helps.

If you find this helpful, feel free to share.

Reference:

  1. https://economictimes.indiatimes.com/markets/expert-view/market-will-correct-and-mini-crashes-are-likely-retail-participation-has-ensured-there-is-no-blood-on-the-street-raamdeo-agrawal/articleshow/86780940.cms
  2. https://economictimes.indiatimes.com/markets/stocks/etmarkets-podcast/listen-in-whats-the-link-between-nifty-and-crude-oil-prices/podcast/86829835.cms
  3. https://www.moneycontrol.com/news/business/personal-finance/pharma-funds-chart-toppers-last-year-but-underperformers-in-2021-7553351.html

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