INSUBCONTINENT EXCLUSIVE:
With Friday’s intraday fall of more than 3,000 points, the 30-share index has lost 12,590 points since January 20
Likewise, the 50-share Nifty index has lost 3,806 points
Equity investors became poorer by Rs 46 lakh crore in 38 sessions on Dalal Street as market participants rushed to prune riskier bets amid
coronavirus pandemic fanning recession fears
With the market showing signs of rebound, is it time to start nibbling at stocks.
We bring you expert advice from some of the top Dalal
Street veterans, who have been there and done that many time before
Read on:-
Last leg of capitulation: Sandeep Tandon, Quant GroupIf you look at our fear index, from the sentiments point of view, we are
coming closer to 2008 crisis
If I factor today’s opening, then the fear will be similar or slightly higher than the 2008 levels
Similarly, if we look at the global data, whether it is a VIX or couple of other proprietary indicators of various firms, they are all
Most of the data which we track with a lot of certainty is closer to 20-year high
It clearly indicates we are in that last leg of capitulation which is unfolding which should bottom out in next few trading sessions
READ DETAILSChurn your portfolios: Hiren Ved, Alchemy Capital Management.Barring a few stocks, that may not have corrected in the FMCG
space, by and large, there has been a 25-30% correction in some of the best names
This is the time to look at your portfolio and say this is something that I wanted to buy but the valuations were too expensive
But now I am getting this business and do I want to switch A business with B business? That is what each investor has to consider
READ DETAILSAFTER THE MARKET MAYHEM, WHAT?13 Mar, 2020Equities can move up eventually, driven by the current Supernova of liquidity
GDP growth is likely to remain weak for some time
Two historical templates can be looked at: 1) 2017 - market up-move accompanied by improving GDP growth
Stocks with higher leverage outperformed 2) 2019 - equities up without GDP acceleration
Stocks with high leverage lagged
Any equity rebound now will look more like 2019, in our view - a weak economy drives topline concerns, in which case leverage will still be
bad.WHAT TO DO NOW: BofA Global Research13 Mar, 2020Buy? Yes
The market is down 20% from 10-Feb; the Index is now at our fair value est
Headline MXIN forward P/E of 14.7 times is back to 2014 levels, (below LT average); while global monetary stimulus (that is supportive of
valuations) is on overdrive
Fiscal expansion can help sentiment, but is a driver of EPS; not P/E.
When to Buy? Not yet
Sentiment around COVID-19 is driving global equities
Several large economies still need to contain the virus
This may require more drastic lockdowns and economic checks
That could drive a market undershoot
WHAT TO DO NOW: BofA Global Research13 Mar, 2020What to Buy? Two approaches:
a) a rebound in stocks that have fallen the most (exporters
/ global cyclical) + large cap stocks that have contributed most to the index's fall (RIL, HDFC, ICICI, Infosys)
This is short term and opportunistic, and is a timing problem; but
b) without economic growth, subsequent performance will remain with a
narrow set of Quality / Low Leverage stocks
On both counts, Indian Private banks stack up well (down c.12-39%)
HDFCB, ICICIB and IIB are Buy rated
WHAT TO DO NOW: ASK Wealth Advisors13 Mar, 2020>> Stagger your equity exposure, hedge it.
>> New Money: – Market levels (and
valuations) are interesting, but more volatility is on the way
A calibrated staggered entry – the cliched “buy the dips” in other words – would be the most optimum call.
>> Existing allocations
(those who are over/adequately allocated): – One needs to ride out the storm, unless there is significant over-allocation (20-30% above
While options are expensive, there is scope to use hedges to protect portfolio positions
Not time for a fiscal stimulus yet: Duvvuri Subbarao, RBI ex-GovernorThe odds of a recession have certainly multiplied because of the
proximate factors -- coronavirus pandemic, the oil supply shock, the turmoil in currency and other financial markets
The possibility of a global recession is because of a supply shock
We must recognise that it is a supply shock
The response by way of fiscal stimulus would come in or would be appropriate if there is complete demand destruction
We got to wait and watch and see how coronavirus evolves in India and around the world
READ DETAILSForget PE, Check PBV: Ridham Desai, MD, Morgan Stanley IndiaUntil uncertainty settles, the market is unlikely to behave
What we are seeing on the screen is just reflecting the fact that we are dealing with a very uncertain environment where we do not know what
could be the extent of downside to growth or the time that we actually end up suffering
Now, you stand back and look at valuations and obviously you cannot look at PE ratios because we do not know where the earnings are going to
Usually in such situations, I tend to look at the price to book
It is a far more stable and reliable valuation measure
READ DETAILSWait out the weekend: Anil Sarin, Centrum PMSDo nothing
Selling into this market is not advisable
Buying is also not advisable because we do not know the full extent
So today or tomorrow, one should do nothing
Wait over the weekend, see how things develop and later on, one can reassess
Right now, the valuations are attractive but the direction is uncertain
So, doing nothing is a good thing to do
READ DETAILSAvoid Smallcaps, Midcaps: Nikhil Kamath, ZERODHAUntil volatility subsides, it is probably prudent for retail investors to stay
away from the smallcaps and midcaps and re-enter the market in a systematic manner wherein they can allocate a certain amount of money every
month into the stock markets with a longer term outlook, instead of trying to bet on what might happen in the short term or the very near
term based on the drop or rise in the stock prices of small and midcap now