Corrections feel scary, but they are the price of long-term returns. This post gives you a calm, step-by-step playbook to handle volatility in 2026: what to buy, what to avoid, and how to deploy cash without regret.
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A simple chart with a dip and recovery. Alt text: “stock market correction playbook 2026”.
Why corrections are normal
Markets don’t go up in a straight line. Corrections are the system’s way of resetting expectations. The only question is whether you have a plan before the red candles arrive.
The 3-bucket framework: core, opportunity, and speculation
The 3-bucket framework
- Core: diversified holdings you expect to hold for years (index/quality).
- Opportunity: high-quality stocks you want more of, but only at better prices.
- Speculation: small positions where you accept the risk of being wrong.
A correction dashboard (signals, actions, limits)
Correction dashboard
| Signal | What it usually means | Action | Limit |
|---|---|---|---|
| Index down 5–8% | Normal pullback | Continue SIP | No leverage |
| Index down 10–15% | Correction | Add to core gradually | Use 20–40% of cash |
| Index down 20%+ | Bear phase | Buy only quality + keep cash | Never go all-in at once |
How to deploy cash without regret
Deploy cash in steps, not in one shot. This reduces regret if the market falls further.
Cash deployment plan (simple)
- Step 1: deploy 20% of cash at first correction trigger
- Step 2: deploy next 20% if market falls further
- Step 3: deploy next 20% when earnings confirm stability
- Keep remaining cash for deep fear days or emergencies
Psychology traps and how to avoid them
- Panic selling core holdings at the bottom
- Trying to time the exact bottom
- Switching strategies every week
- Confusing price fall with business failure
- Overleveraging because prices look attractive
FAQs
FAQs
Should I stop my SIP during a correction?
Usually no. Corrections are when SIPs buy more units at lower prices.
How much cash should I keep?
Many investors keep 5–15% as dry powder and emergency buffer, depending on job stability and obligations.
Keyword cluster
- stock market correction strategy
- what to do in market crash india
- buying stocks during correction
- how to stay calm in volatility
- sip during correction
Reader exercise (10 minutes)
- Open the latest quarterly presentation of one company in this theme.
- Write 5 bullet points: demand, pricing, margin, risks, and management confidence.
- Compare that with the market’s recent price action. Are they aligned?
- Write one sentence: “I will buy only if ____ happens.”
- Save this note. Review after the next quarter.
Deep dive: corrections are a feature, not a bug
Markets must periodically reset. If there were no corrections, valuations would become unstable. The real skill is to keep your behaviour stable while prices are unstable.
Emergency rules
- Never invest emergency funds in equity.
- Do not use leverage to “buy the dip”.
- Reduce position size if sleep is disturbed.
Glossary
- Drawdown: peak-to-trough fall.
- Rebalancing: returning to target allocation.
Myth vs reality
- Myth: A correction means the market is broken.
Reality: Corrections are normal resets that create future opportunities. - Myth: The best investors buy at the exact bottom.
Reality: The best investors buy in ranges with discipline and survive drawdowns. - Myth: Selling everything reduces risk.
Reality: Panic selling often locks in losses; risk reduces through allocation and position sizing.
Worked example (with numbers you can copy)
Assume you invest ₹10,000 per month via SIP. In a volatile quarter, prices fall 10%. Your SIP buys more units at lower prices. Over 12 months, the average purchase price becomes lower than your initial price, improving long-term returns. The discipline is simple: keep SIP running, rebalance if allocation drifts, and avoid impulsive switching.
Printable one-page checklist
- Do I have emergency cash outside equity?
- Is my SIP continuing as planned?
- Do I have a staged cash deployment plan?
- Am I avoiding leverage?
- Am I rebalancing calmly within bands?
Extra FAQs
What if the market keeps falling after I buy?
That is why you buy in steps. Keep cash for deeper levels.
Should I check prices daily?
If it increases stress, reduce frequency. Long-term investors can check weekly or monthly.
When should I sell in a correction?
Sell only if the business breaks or your allocation becomes unsafe, not because the index is red.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Volatility is not risk for long-term investors; permanent loss is. Permanent loss usually comes from weak businesses, leverage, and forced selling. Avoid those three and you win.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
Volatility is not risk for long-term investors; permanent loss is. Permanent loss usually comes from weak businesses, leverage, and forced selling. Avoid those three and you win.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
Volatility is not risk for long-term investors; permanent loss is. Permanent loss usually comes from weak businesses, leverage, and forced selling. Avoid those three and you win.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
Volatility is not risk for long-term investors; permanent loss is. Permanent loss usually comes from weak businesses, leverage, and forced selling. Avoid those three and you win.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
Volatility is not risk for long-term investors; permanent loss is. Permanent loss usually comes from weak businesses, leverage, and forced selling. Avoid those three and you win.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
The purpose of a playbook is to remove decision-making during panic. When prices fall fast, your brain wants immediate action. A written plan prevents the two worst behaviours: panic selling and impulsive all-in buying.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
During corrections, focus on savings rate and process, not predictions. If you keep investing, your future self benefits from lower purchase prices and disciplined behaviour.
Volatility is not risk for long-term investors; permanent loss is. Permanent loss usually comes from weak businesses, leverage, and forced selling. Avoid those three and you win.
If you struggle emotionally, reduce position sizes. Smaller positions create calmer behaviour, and calm behaviour creates better decisions.
Use corrections to upgrade portfolio quality. Trim weak, speculative holdings and add to diversified core. This is how long-term portfolios improve over cycles.
