A stock market correction occurs when the price movement of a share or stock index that tracks the performance of multiple shares experiences a rapid decline. This transpires when the losses affect an entire market. Strictly speaking, no set amount of loss defines a market correction, but the accepted amount is a decline of 10%.
Analysts usually consider market corrections to be short-term situations but do not define a certain amount of time. It has been given the term ‘correction’ because once the market recovers from the decline, the prices then reflect the accurate value of the underlying assets. Unlike market manipulations, stock market corrections happen naturally and are not driven by investor intent.