The six days of decline have eroded over Rs 15 lakh crore from Indian stock markets as the Israel-Hamas war and rising U.S. yields spook equity investors. Market veterans, however, said investors should consider this as an opportunity to buy.
Sensex and Nifty fell more than 1% on Thursday, adding to the losses of Rs 14.6 lakh crore in the previous five sessions. In all, the benchmark indices have now fallen more than 4.8% in the last six sessions so far.
Small and mid-cap gauges fell more than 2% down to their lowest level in two months on Thursday, while most sectoral indices were trading in the red.
This is more about the froth going away, Nilesh Shah, managing director and chief executive officer at Envision Capital, told BQ Prime. India's macros remain strong, he said.
Manish Chokhani, director, Enam Holdings, said earnings growth and longevity are "intact in this bull market".
Here's what India's market veterans have to say about the ongoing slide:
'Investors Should Keep Doing Their SIPs'
Nilesh Shah, managing director of Kotak Mahindra AMC
"There was a barrage of bad news in last few weeks. Geopolitical situation, higher for longer US rates and higher energy prices have created an uncertainty in the investors mind," Shah said.
"Our valuation was at a premium to other peers. Most investors are sitting on profit in India unlike other markets," Shah said. "There were some excess in micro caps and mini caps which needed a correction."
"In the last few months we had seen 'kachra' (garbage) stocks outperforming quality. Donkeys can outperform horses for a while, but not for long," he said. "We believe every correction is a great opportunity to buy into the quality at reasonable price portfolio for long term investors."
Shah said investors should keep doing their SIPs and take advantage of the correction and add to your equity portfolio.
'Will Buy If There As Further Weakness'
Chakri Lokpriya, managing director of TCG AMC
"Markets are fundamentally looking strong. Profits are being booked on stocks that ran up fast," Lokpriya said. "We will buy if there is any further weakness,"
'Credit, Consumption and Capex Plays Look Attractive'
Nilesh Shah, MD & CEO, Envision Capital
The selloff is more about giving up some of the strong gains this year and ensures weaker players go off the road, Shah said. "It is more about the froth going away."
On the ground, micros continue to be strong, according to Shah. "High-frequency indicators suggest strong business momentum and September quarter earnings continue to be very strong."
"This remains a buy on dips market, but you need some dry powder in a market like this," he said. "The three Cs: Credit, consumption and capex plays look attractive."
'Good Entry Points In Select Areas'
Manish Chokhani, Director, Enam Holdings
The valuation excesses—particularly in mid and small caps—are being corrected in this selloff, Chokhani said. That’s giving rise to some very good entry points in select areas like banking, he said. "In any case, true investors are rewarded by earning growth and longevity--both of which are intact in this bull market."
'Be Watchful Of Sudden Opportunities'
Deepak Shenoy, Founder of Capital Mind
Markets are now about 5.5% from the top, which is not a whole lot. Such volatility is to be expected, especially in mid and small caps, Shenoy said. "Yet, the small caps are not down much--just 6% down in October so far--while Nifty is down 3%. In fact, from April, mid and small caps are up 25% at the index level (Nifty is up 10%)."
"I would say start being afraid only after a 10% fall from the top (which is a while away). Till then, we should just be watchful of sudden opportunities."
'Watch For Signs of Weakening U.S. Inflation'
Vijay Chandok, managing director, ICICI Securities
The primary reason for the correction is hardening of U.S. bond yields to above 5% which has in a sense crossed an important psychological level, Chandok said. "This being a benchmark for determining of value virtually of all asset classes becomes an important number to watch."
A secondary reason is the intensification of the ongoing conflict between Israel and Gaza, he said.
"Investors need to watch any signs of weakening U.S. inflation or economy that could potentially trigger a reversal of stance by the Fed on interest rates," Chandok said. "Any indication of that is likely to reflect in reduction in the benchmark yield in U.S and that would be a positive for India especially because of strong earnings and fundamentals of Indian equities."
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