Given the intensity of the fall and given that it is a global sell-off, one should not be in a hurry to enter the market, especially since most Indian investors are overbought, said Gautam Sinha Roy of Motilal Oswal MF.
Fundamental and technical market experts SP Tulsian of sptulsian.com, Anand Tandon, Prakash Gaba of prakashgaba.com, Mitessh Thakkar of mitesshthakkar.com along with Gautam Sinha Roy, Fund Manager, Motilal Oswal Mutual Fund also shared their outlook for the market.
Sinha said given the intensity of the fall and given that it is a global sell-off driven by US bond yields rising, one should not be in a hurry to enter the market, especially since most Indian investors are overbought.
So, not a market to jump into but with correction taking shape, there will be good buying opportunities and in select stocks, there already are buying opportunities, he said.
When asked if it is a good time to enter into not just quality names but market leaders, Roy said yes it makes complete sense to stick with market leaders in this sort of an environment. Moreover, the relative valuations of some of these companies are actually way better than some of the midcap or smallcap companies, which have been extremely expensive for some time now, he added.
When asked if one should buy into the declines of stocks like HDFC twins, Maruti etc or is something fundamentally changing for them. Roy said nothing is fundamentally changing for them, only the valuations that were on the higher side are reverting, which is good from an investment perspective and so selectively, as flows come in the house will deploy money.
According to Roy, the retail money may not come into equities at the same pace as it has been earlier because the bonds have become attractive after the rise in bond yields. “So, the differential between the prospective bond returns and equity returns have disappeared,” he said.
However, the enormous money that was coming in through retail investors may not disappear but will come down and could still be a high number from a historical context.
Talking about the impact of long-term capital gain tax, Roy said from long-term perspective it does not matter in terms of attractiveness of the equities and people will learn to live with it but the differential between equity returns and other asset classes’ returns comes down.
On midcaps, Roy said they continue to be very expensive and there is room for downside there, especially if the liquidity flows dries up a bit. So, there is a case for avoiding midcaps although there individual stocks that may look good, he added.
However, Tuslian is of the opinion that by Wednesday afternoon recovery will come back with buying coming back with a vengeance. The weakness is unlikely to continue after Wednesday and the intensity of the volatility will start tapering down. The market is presenting an excellent buying opportunity in quality and frontline stocks but stay away from smallcaps, he said.