shrewd: Sensex, Nifty hit 52-week low. Here’s what investors should do
Foreign equity outflows in India are approaching the Rs 2 lakh crore mark and bears dominate Dalal Street. Don’t panic, stick to conviction stocks and pay attention to sectors that are likely to be least affected by rising inflation, analysts said.
Siddhartha Khemka, head of retail research, MOSL, said it was a difficult time. He said the next two or three months would be a transitional phase for the economy and to prepare for higher volatility, stick to quality stocks and not panic and exit.
“If you’re still convinced of your main story, I think you need to hold your stocks and see through that volatility. That should help in this environment,” Khemka told ET NOW.
On Thursday, the BSE Sensex hit a 52-week low at 51,425.48, before closing the day at 51,495.79, down 1,045.60 points or 1.99%. Since around June 9, the BSE Sensex has lost over 3,800 points in five sessions. Nifty50 also fell to a 52-week low of 15,335.10 during the day. It eventually closed the day at 15,360.60, down 2.11%.
Market weakness is compounded by the fact that India’s valuations continue to trade slightly above long-term averages and FIIs continue to be in sell mode.
“Equities trading at high valuations and sectors like IT, metals have been hit the hardest. In such a situation, capital preservation is the best theme. Investing in a balanced portfolio of stocks, debt and liquidity is a must In stocks, safe sectors will be least affected by inflation and aggressive policies such as financials Investors can also look to defensives such as consumer, IT , pharmaceuticals and telecommunications for long-term returns,” said Vinod Nair, head of research at .
Sandip Sabharwal from asksandipsabharwal.com said the same depends on what you are holding. I don’t know who is holding what. In my view, after this correction, the sectors to buy will be autos, capital goods and financials in that order.
“I think many of the problems that auto stocks had been facing for 2-3 years are being resolved and domestic auto companies will do very well. Many capital goods companies have huge order books, and the fulfillment cycle is unlikely to be affected in the next couple of years, so this sector will also do well,” Sabharwal said.
“And Indian financials are very well placed in terms of capital adequacy and a lower base. But they are the ones who will bear the brunt of the last leg of the fall the most because they obviously had the highest weighting. I think that’s where we’ll have to where I wouldn’t want to invest is going to be space commodities stocks and tech stocks because I think tech in the next two years will be more difficult with declining budgets and reduced growth rates,” added Sabharwal.
Ajit Mishra, Vice President – Research at
Broking said the market is skeptical about how global economies will achieve growth amid aggressive central bank tightening.
“After Nifty50’s decisive dip below 15,650, the next major support exists at 14,800-15,000. We think it’s prudent to stay light and align positions accordingly until we see a decisive signal for reversal,” Mishra said.