The 2,000-point fall in the BSE Sensex has made a number of sectors and stocks look attractive, say market watchers. The 11 per cent fall has brought down valuations at par with the long-term trend. However, given global uncertainties, a stagewise approach in making fresh investments would be advisable at this point.
“We have been impacted by what’s happening globally,” says Mr Ramanathan K, the chief investment officer of ING Investment Management. “As a result of European events, foreign investors are pulling money out of emerging markets. Close to $11 billion has moved out of Asian markets (excluding China) over the past few weeks,” he says.
Exiting investors are pulling the markets down. In the past two weeks, FIIs have sold a total of $1.4 bilion in Indian shares — one of the factors pulling the Indian markets down.
“It is also hard to say where the markets are headed, as we are not the deciding party in these events,” says Mr Ajay Parmar, head of research, Emkay Shares. Domestic developments such as earnings haven’t really had an impact on the market, he says. This is because while earnings were good, they had already been factored in the valuations.
“We are advising people to wait for a few days before buying. But a stagewise approach would be good,” he adds. A big factor to watch out for at this point is the monsoon, says Mr Rajen Shah, the chief investment officer of Angel Broking. “If the monsoon is good, the Sensex could be at 18,000 by year end — or else it could fall to 15,000,” he said.
However, at current valuations, he finds several mid-cap stocks attractive.
Other investors are also finding value in the market at these levels. “The current levels could be a good entry point as in valuation terms, markets are close to the historical averages. A staged entry should be the way to go” says Mr Ramanathan.
He is optimistic on the prospects of the auto companies, public sector banks and some industrial stocks.