A key indicator has been the market staying below its 200-day moving average and forming successive lower tops and lower bottoms.
In the three bear markets of the last 20 peak, Indian benchmarks have already fallen close to 40% from their record highs seen in January this year. But the moot question here, according to Morgan Stanly, is how long this bear phase will last, and not how much further prices are going to fall.
Macro fundamentals could take 18 month to bottom out. Based on this, the bear market may have another 25-50 weeks to go, the pace of fall in stock prices will decline going forward.
“The markets will likely bounce back as it does in bear markets the trigger this time around could be a sanguine earnings season, benign action from the RBI and weak sentiment,” the report said. But the brokerage maintains that it will use the opportunity to book profits.

Just Play it Safe

Dare to bare your wisdom in the current market in the current market situation? You better shelves the idea if you have the faintest clue of the factors behind the negative sentiment.
Defensive Positioning
No investor likes a ranged bound, highly volatile market marked by spikes and falls at regular intervals. And if you believe industry analysts, there is no let-off in the second half as well. They hold the view that bears and bulls will continue to punch each other to gain supremacy in the capital market over the next six months and losing bout probably will be you – the investor. Thus, it is better to go for a defensive positioning.

Stay with Cash

If you think you don’t belong to the first category, are cautious about your investments but still you want to get the best out of the equity markets, and then you should better spend the next six months pilling up cash. Over the near term markets will remain volatile due to multiple factors such as policy responses to rising inflation ahead of the national elections, absence of FII flows until the global scenario improves and earning growth moderation. In this scenario we think it won’t be a bad idea to stay with cash.

Capital Protection

If the first two themes don’t excite you, and you are investor who wants to enjoy the best of both equity and debt markets, then you should opt for structured products with capital protection. The advantage of investing in a capital protection product is that it allows participation in the stock markets without the accompanying worries of capital erosion.

Value Investing

If are an aggressive investor, then probably your investment outlook should be to do value picking in the stock markets. In the current market scenario, analysts believe that quality stocks across sectored will clock relatively good performance as investor focus returns to fundamentals. You should slip into the contrarian investing style, buying stocks that are currently trading below their net asset values.

Systematic Route

Last but not the least, your investment theme should be one which includes are disciplined approach to investing. Markets are expected to be cyclical and in such a scenario analysts recommended that either you can reduced the risk of equities by increasing your holding period or invest regularly through systematic investment plans.
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