Investors look for bargain hunts as markets crash, brokers advise caution

On a day the market crashed by more than 3 per cent, brokers were inundated with queries from customers on buying opportunities and bargain hunts, especially in the large cap space.

There was renewed interest in banking, IT, pharma and infrastructure stocks.

On Monday, banking, media, realty, metal and auto stocks fell the most, with the Bank Nifty falling as much as 5.1 per cent per cent.

"We are getting a lot of queries from clients on what to buy. They have seen that last year too after a crash stocks delivered 30-40 per cent returns within a few weeks. Investors are hoping gains will be similar this time too," said B Gopkumar, chief executive, Axis Securities.

In the last year, defensive sectors recovered faster than other themes, but  cyclical and rate-sensitive sectors have started outperforming the market and playing a catch-up rally, especially after the Union Budget.

"Investors should continue with their existing investments and may look at opportunistic buys provided it is done in a calibrated manner," said Lav Chaturvedi, CEO, Reliance Securities.

Experts, however, believe that it is too early to predict which way the markets will move in the coming days and a lot would depend on the lockdown situation and the progress of the vaccination programme.

There has been a buy-on-dips kind of mood prevailing for quite some time now, said experts, even as the market has been making lower highs.

"It is time to be cautious," said Rahul Rege, business head - retail, Emkay Global Financial Services. "Some investors have become over confident and unmindful of the downside risks that prevail currently. This is not the right time to build trading positions or to time the market."

Benchmark indices slumped to a 10-week low as daily covid-19 infections spiked. Investors remained worried about the economic fallout of the fresh surge in coronavirus cases and the subsequent restrictions announced by several state governments. Advance decline ratio plunged to the lowest since February 28 suggesting the amount of panic in the broader markets.

"These developments could jeopardise the market's assumption of around 11 per cent GDP growth and above 30 per cent Nifty earnings growth," said Deepak Jasani, head of retail research, HDFC Securities.

Axis Securities' market valuation index has retraced back to the caution zone, and stock picking and sector rotation are key at the current level to generate outperformance, the brokerage said in a recent note.