Blood bath on "D" street: an opportunity to invest or maintain caution?

What should investors do?

That's the question which all must be thinking after witnessing Friday's carnage on the dalal street. Amid the prevailing uncertainty there cannot, understandably, be one answer to investors' query about where to park money.

 

Some market participants advise to stay away from equities as well as debt market and take a cash call. Some differ and advocate these are the opportunities to make a long term portfolio by picking beaten down quality stocks. They suggest also to look at the bond markets from at least a two years perspective.

 

According to them, investors can consider export-oriented companies - mainly IT sector and take a long buy call on severely beaten down selective public sector banks. However, they suggest to avoid counters where foreign institutions' holding is high.

 

"What investors should not do is panic. A crisis is also an opportunity," said Arvind Sethi, chief executive officer at Tata Mutual Fund. According to him one should stick with their investment plan. "Tactically equities are beginning to offer value and the debt market is providing terrific opportunities to lock in at very good yields for 1 to 5 year FMP's," he added.

 

G Pradeepkumar, CEO of Union KBC Mutual Fund agrees that for long term investors such drastic falls are opportunities. "Staggered investment is what we are advising to our clients," he said in a text message.

 

Despite various recent measures taken by the government, it appears situation continues to remain in mess. Depreciation in Rupee still is not arrested and concerns over current account deficit (CAD) keeps looming large in spite of promises made by the Finance Minister to keep it in check.

 

Ambareesh Baliga, managing parter (global wealth management) at Edelweiss Financial Services, said, "In a fluid situation like this, valuations may not have any meaning. If the crack down continues, one must exit as next level for Nifty could be around 5,200. In case, markets bounce back after today's fall one should use the opportunity to exit and take a cash call."

 

Gopal Agarwal, chief investment officer (CIO) at Mirae Asset, however, is not in favour of taking a cash call at this juncture. "I would suggest investors to deploy money in sectors which can have a trigger. Valuations are good and risk-reward ratio is quite favourable, though there could be pains for some more time. Markets, currently, seem to be ignoring positives of good monsoons and several reform measures due to CAD factor," he says.