Market Crash: Veterans Advise To 'Wait Out The Storm'
Samir Arora and Nilesh Shah cautioned against knee-jerk reactions after the Nifty, Sensex witnessed a sharp fall on Tuesday.
The Indian stock market plummeted on Tuesday, with the Nifty and Sensex trading close to 5% lower, a day after both benchmark indices had touched new highs on the back of exit polls predicting a tumbing victory for the incumbent Prime Minister Narendra Modi-led party. Market veterans remain cautious against knee-jerk reactions to this dramatic and unexpected fall.
"Part of the reason why it (the markets) is falling so dramatically today is because it went up dramatically yesterday, and maybe more people pilled on for the stocks that had gone up 10% yesterday, and those guys are now throwing them back," Samir Arora, the founder of Helios Capital, told NDTV Profit.
Nilesh Shah, managing director of Kotak Mahindra AMC, compared the "unprecedented" situation to the 2004 elections, when the results were against the expectations of the market. However, he said that the margins are fairly slim for a fair number of seats.
The economic fundamentals are in place, and it is not a time to make dramatic decisions, he said. "Might as well wait out when the storm is brewing and take a view after data is available," Shah said.
There will be a time for investors to make portfolio decisions, but for now, "let the traders have a field day", he said.
Arora, perplexed by the sudden decline, expressed, "The entire market's decline implies a greater apprehension, and I fail to comprehend the reasoning behind this fear." According to him, the results could impact a few companies, but the sharp fall across the markets cannot be due to the results. The only way this fall is acceptable is when the government changes, but the final results are yet to be announced, he said.
Shah of Kotak Mahindra advises looking for opportunities and then making the call to buy at the right valuation or book profit in light of the current fall.
Talking about the bond yields, Shah said there will be moves up and down, but this is the time to lock in duration with a medium-term view. On the fixed income side, Shah said there is a reasonably good opportunity to lock in higher yields.
