New Delhi, Sept. 15 -- There are two different ways in which market corrections can emerge. One is a price correction, where you see a sharp drop in price, and the other is a time correction, where you don't see a sharp drop but a more modest slip that stays the same way for a long time. What you are seeing now is akin to time correction, and it's important to understand and identify both, as they have some important lessons for investors.

A price correction is a sharp drop at the index level. For instance, during the 2008 stock market crash, the Nifty 50 fell from about 6,290 in January 2008 to around 2,520 by October -- a nearly 60% collapse in roughly 10 months. During such phases, valuations correct sharply: prices fall fast, and the...