Choppy markets: Trade with caution, take a long-term view, say analysts

  • HT Correspondent, Hindustan Times
  • Updated: Apr 21, 2015 00:19 IST

Amid a volatile equity market, financial advisers had a word of caution: make informed and well-researched decisions before shuffling around the portfolio with a medium-to-long-term savings plan in mind.

The BSE Sensex and NSE Nifty fell 1.9% and 1.8% respectively on Monday dragged down by weak corporate earnings and tax notices on foreign portfolio funds.

Investor wealth eroded sharply by Rs 1.59 lakh crore, taking the total market capitalisation of all the BSE-listed firms to Rs 1,02,64,003 crore.

Consequently, some large stocks have come off their highs fuelling temptation among small investors to enter the market.

While this has caught small investors’ attention, traders advise caution. “I think the market overhang is still there. So this is not the right time for small and retail investors to buy,” says Angel Broking vice president Mayuresh Joshi.

“There might be a bounce back in a day or two but that would be short-lived as the factors that are causing the markets to fall, are still there. It will take time for the (ongoing) Land Bill issue to be resolved and passed in the Parliament, for the weak corporate earnings to be fully reported and the international headwinds to pass on,” he added.

A UBS report said earnings forecasts are factoring in growth acceleration for sectors such as consumers, autos, banks, infrastructure and capital goods, while seeing fall in IT services.

“We expect mild recovery in 2015-16 and a sharper recovery only in 2016-17”.

Monday’s fall was led by heavyweights; Reliance Industries (down 4.4%), Hero Motors (down 3.9%), Cipla (down 3%), Wipro (down 1.9%). The fall was seen in the midcap sector too which had been rising in the past few sessions. Marico fell 5.5%, while Godrej Industries was down 5.3% and Union Bank lost 3.5%.

Reliance Securities research head Hitesh Agarwal said that the development on taxes for global investors is acting as a short-term headwind. "Such short-term corrections throw open good opportunities for investors with a medium-to-long-term investment horizon to invest into equities, as at 7%-8% expected GDP growth rates, India offers a great opportunity for investors, both domestic and global."

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