A major correction was always round the corner on the domestic bourses after a solid run up in share prices that was witnessed over the past few months. Excessive leveraging by traders and retail investors provided the trigger for correction when FIIs pressed heavy sales as global emerging markets witnessed a sell-off. As the weakness in the market triggered off a series of margin calls, brokers and banks were forced to liquidate positions of retail investors that could not meet margin payments.
Analysts feel that the fundamentals of the Indian corporate sector remain strong and strong corporate earnings growth would limit downside on the domestic bourses. The macro growth outlook for India remains strong, supported by structural factors like robust domestic consumption to a healthy take-off in the capital expenditure cycle. Favorable demographics with large young population will drive consumer demand.
In fact, Indian companies are better place than their Asian counterpart to weather global upheavals given that they don't rely excessively on external demand as a source of growth.
However, some more correction in near term may not be ruled out given that the rally has been quite steep over the past few months