For those who have invested in bank, auto, metal or cement stocks, this is the time to show some patience. India's largest private sector bank ICICI, the largest auto company Tata Motors to leading cement producer ACC have hit their 52-week lows on a day when the Sensex fell below the 14,000 mark.
The top five stocks, which are part of the Sensex, have dragged the benchmark index down by 3642 points from its highs in January. These are the stocks that no fund manager could have ignored – ICICI, Reliance Industries, Larsen & Toubro, State Bank of India and Reliance Infrastructure.
There is little option for investors who bought these at twice or more its current price than to hold them for a longer term. "If the reasons one bought the stock remains valid and the time horizon is aligned then there is no problem," says Shriram Iyer, head of research at Edelweiss Capital.
As earnings growth of companies is expected to be lower in 2009-10 than in the last few years, some advisors are looking at a three-year holding period for companies with strong track record. With oil prices not retreating from their highs and the political situation at home turning volatile, the markets have no hopes of turning around soon.
FIIs and hedge fund managers in particular have been negative on the Indian markets and continue to sell Indian equities.