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Every one talks of buy the dip. Let's look at it with data.
In the last 18 years, there have been 45 instances where the NIFTY index has fallen 4% or more in a day including the one we saw on Thursday.
Observations:
1. Of the previous 44 instances, average returns post such fall is 0.2%, 2.0%, 5.6% 15.5% and 32.3% for the time periods of 1 week, 1 month, 3 months, 6 months and 1 year respectively. So, you will likely do well if you buy.
2. You might see more correction after a week on half the occasions, but the probability of gains keep increasing with time. See summary table below:
In the last 18 years, there have been 45 instances where the NIFTY index has fallen 4% or more in a day including the one we saw on Thursday.
Observations:
1. Of the previous 44 instances, average returns post such fall is 0.2%, 2.0%, 5.6% 15.5% and 32.3% for the time periods of 1 week, 1 month, 3 months, 6 months and 1 year respectively. So, you will likely do well if you buy.
2. You might see more correction after a week on half the occasions, but the probability of gains keep increasing with time. See summary table below:
