The best time to buy is when there is blood on the Street, says an old adage. And that may be the much-needed piece of advice for fence-sitters. It was volatile Tuesday on Dalal Street as Indian indices saw deep cuts of almost 1.5 percent each in the second half of trade spooked by rising geopolitical concerns and growth worries.
Though the indices are bleeding; the sentiment among investors, especially retail investors remains buoyant, says Devang Mehta, Senior Vice President & Head Equity Advisory, Anand Rathi Financial Services.
“People want to buy into good quality names. They are now are aware that they shouldn’t get caught into herd mentality. If there is another 150-200 points correction then more retail investors will get attracted to this market. We would probably utilise this fall to buy in the markets rather than being much worried about what is going to happen in the immediate future,” he tells CNBC-TV18 in an interview.
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Technical analyst Sudarshan Sukhani of S2analytics.com admits that today’s decline wasn’t anticipated by many and its ferocity was quite unusual. “Today’s fall raises red flags because the Nifty has breached 8,050, which was an important support level. If this continues tomorrow then a short- sell is advised,” he adds.
This market may continue to see very high volatility in a narrow range, he cautions.
Historically, the October series has been the one where the trend has remained on the downside. But if this decline is confirmed tomorrow then we would see lower levels in October, he adds.
Those playing the market should place stop loss at 8,100, he recommends.
Meanwhile, Mithil Pradhan Chief Strategist – Derivatives & Technicals Violet Arc Global Managers Pvt Ltd sees 7,790 as the most important support level for the Nifty. He feels it is too late to open shorts, so one should buy the Nifty on dips and look for level below 7,950 to enter this market.
Midcaps, realty stocks bear the brunt
Midcaps too ended the day deep in the red with the index down almost 2 percent. P Phani Sekhar, Fund Manager—PMS, Angel Broking is of the view that since one is not expecting a protracted correction in this space, it might be a good idea to buy these names in sectors like IT and financial services like banks.
Midcap private sector banks can be accumulated on declines. From the larger pack, Axis and SBI look attractive at these levels. ING Vysya and South Indian Bank are good bets for those having 12 months view, he adds. NBFCs like Indiab-ulls Housing Finance can also be bought on dips, he says.
According to Mehta, market participants are waiting to enter the market and there are enough good quality stock ideas available in this market which can generate big alpha going ahead. “Many largecaps are trading at good valuation and price point discount. From the so-called defensive universe- the midcap FMCG and IT space, many stocks are available at good valuation. Those with three-six months perspective should see this as an attractive correction to get into the market,” he says.
From the auto space, Mehta likes Ashok Leyland . One can bet on this sector on dips given the upcoming festive season and CV cycle recovery.
Bajaj Corp , Pidilite Industries and Zydus Wellness are his other top picks. “These stocks give defensive edge and durable competitive advantage to your portfolio. These are excellent to own from a six- nine months view,” he says.
Realty stocks also took it on the chin. The CNX Real Estate Index slid more than 5.5 percent with DLF emerging as the top loser on the Nifty.
Sharing views on the sector, Sekhar says, “Investors were expecting some recovery in the realty sector, but they have been disappointed as volatility crept in during the fag end. However, the sector is a good long-term attractive bet. Those looking to invest in this sector should have patience. They should keep buying the dips but in a staggered manner.”