The Sensex fell to some of its lowest levels with the benchmark index closing at 17,905.91 on August 21. From the start of August itself, till August 21, the Sensex lost nearly 1,400 points before making a slight recovery in the past couple of trading sessions.
"We are taking it (the current bounce-back in the equity markets) as a technical rebound and it's still rather early to call it a reversal," says Ajit Mishra, assistant vice-president of equity retail research, Religare Securities, on whether the markets have bottomed out.
The Sensex on Monday closed almost flat at 18,558.13 points, just with a 38.69 points gain.
Bank, auto, select capital goods and infra counters may see a significant rebound now, adds Mishra.
"The Nifty index is down by some 11% in the past three months," says Pankaj Murarka, senior fund manager of equity at Axis Mutual Fund. The Nifty on Monday closed at 5,476.50 points, up a mere 4.75 points or 0.09% up from its previous close.
Analysts recommend a cautious and long-term approach to investing at current levels.
Sachin Shah, fund manager, Emkay, is positive on stocks like NMDC, Sesa Goa and Tata Steel that still have upside potential due to the recovery in China.
"For us portfolio construction is driven by investing into good business. We are positive on healthcare, information technology and consumer sectors," says Murarka of Axis Mutual Fund.