Market correction provides buying option, say experts

Benchmark indices are off nearly 10% from peak

The ongoing-correction in the stock market has provided good buying opportunity from a medium to long-term perspective, say market experts.  The country’s benchmark indices, the Nifty and Sensex, are down nearly 10 per cent from the record highs, while several stocks are available at an average 20 per cent cheaper from their respective one-year highs.

“The swift and savage correction in parts of the market over the past few days provides more options for the medium-term,” writes Sanjeev Prasad, senior executive director and co-head, Kotak Institutional Equities, in a morning note to clients. “Some good-quality growth stocks in the automobiles and information sectors offer reasonable valuations now and we would look at accumulating these stocks at current levels.”

Earnings disappointed, weak monsoon forecasts and tax uncertainties for foreign investors have caused the market to correct, say experts.

G Chokkalingam, founder, Equinomics Research & Advisory, says in the past, the market has bottomed out whenever it has corrected about 8-10 per cent.

“Several large cap stocks have come off around 20 per cent from their highs. The market should see a bounce back,” he said.

Some blue chip names, including ICICI Bank, State Bank of India, Sun Pharma and Hero MotoCorp, have seen their share prices drop as much as 20 per cent from their 2015 peak.

“Overall market valuations now look more reasonable but this is largely contingent on earnings holding up during the course of the year,” says Prasad.

Raamdeo Agrawal, joint managing director, Motilal Oswal, believes the recent market movement is just a correction after a sharp rally and the Indian market continues to remain in bull territory.

“There is no reason to panic. The market will at the most consolidate at current levels till there is clarity on corporate earnings,” he says.