Why Staying the Course Matters During Market Corrections in Indian Equities

Over the last few years, Indian equities have gained a reputation for moving only one way—up. This perception, while comforting, is historically inaccurate. To provide better context, we examined the Nifty 50 index as a benchmark to understand how often markets experience meaningful corrections, defined as a minimum 10% drop from recent highs.

Market Corrections: A Regular Phenomenon

Correction Zones – RED (20%), BLUE (15%), GREEN (10%)]

From 2000 to 2025, there have been approximately 6,419 trading days in the Indian stock market. Out of these, the market has spent nearly 3,037 days—around 47% of the time—in a state of at least 10% correction from its peak. According to research and market insights from Vivekam Financial Services, such corrections are not only common but also essential for maintaining market health and presenting long-term investment opportunities

Compare that to the recent bull phase: between 2021 and 2025, markets were in a correction zone on just 95 out of ~984 days, or less than 10% of the time. This created a false sense of security among a new wave of investors.

A New Generation of Investors, A New Set of Expectations

From just 41 million demat accounts in 2020, India saw an explosive growth to over 175 million accounts by 2024, adding over 134 million new investors in just four years. Buoyed by this rapid expansion and stellar market returns, many began to believe that equities only go up—and that any market dip would quickly be followed by a stronger rebound. But 2025 brought a wake-up call.

Global Headwinds, Local Volatility

As geopolitical tensions and political instability impacted global economies, the Indian stock market found itself in correction over 70 times in just the first five months of 2025. This marked a sharp reversal from recent years—and introduced many investors to a reality they had never experienced: markets that don’t rebound quickly.

Market Correction Frequency – 2025 YTD]

The Psychological Impact on New Investors

Traditionally cautious, Indian retail investors had tasted outsized returns during the last Bull Run. But this experience skewed expectations—many began treating equity investments as fixed-income instruments, expecting minimum returns regardless of risk.

Compounding this behavior was the sharp rise in leverage. The Margin Trading Facility (MTF) book ballooned:

• From ₹7,100 crore in Feb 2020
• To ₹29,500 crore by Jan 2023
• And further to ₹54,537 crore by Jan 2024
• Eventually peaking at ₹80,500 crore in October 2024

This indicates that a significant portion of the market was exposed to leveraged bets—amplifying both gains and potential losses.

Despite recent turbulence, long-term data continues to support a fundamental truth:
Markets that correct by 10%, 15%, or even 20% have historically recovered and delivered 16–18% CAGR over time. But this recovery requires one critical ingredient—patience. The real question now is whether this new generation of investors, many of whom are bound by leverage or short-term goals, can afford to wait out the downturns.

Corrections are not an anomaly—they are the norm.
Understanding this is essential for anyone serious about building wealth through Indian equities. The ability to stay the course during corrections, especially in a high-growth economy like India’s, can make all the difference between short-term panic and long-term success.