Is it a good time to enter the equity markets?

Invest in tranches and hold for more than six months: Experts

For stock market investors, things have turned worse. As the S&P BSE Sensex plunged 590 points on Tuesday, coupled with the rupee fall, there is little they can do. In the last two weeks, the S&P BSE Sensex fell 6.64 per cent, whereas the currency at Rs 66.24 against a dollar depreciated by a good 7.37.

Amid this downtrend, there could also be opportunities but only if you are brave enough to take a call and stay invested for at least the next six months. “Such dips in the market are always a good entry point for customers and they should make the most of such times,” says Japjit Bedi, head-deposits and wealth management at Deutsche Bank. “If a person is sitting on excess cash, or holds more than 15-20 per cent in liquid assets, then he should definitely use some money to invest in tranches in equities.”

Experts feel Indian stocks are very attractively valued at this point. Foreign clients are also eyeing Indian stock markets and taking calculated risks. Saurabh Mukherjea, chief executive-institutional equities, Ambit Capital, adds: “Somebody who doesn’t have a very short-term horizon should definitely pick some stocks, particularly cyclicals, and avoid banking stocks as of now. If the investor has a less-than-six-month investment horizon, then he should stay away from equity as of now.”

However, the trick here is to use the cash lying idle either in the locker or debt instruments and cash on a situation like this. Also, invest in a staggered manner. G Chokkalingam, executive director and chief investment officer, Centrum Wealth Management, advises that an average investor should not have more than 30 per cent in equities. If the investor is very conservative, not more than 20 per cent. Hence, this would be a good time to enter the market for someone with less than 30 per cent allocation in equities.

According to analysts, it is not a dead-end and the market will recover and stabilise from current levels. Information Technology (IT), fast-moving consumer goods and pharmaceuticals are a few sectors experts are bullish about. Investors can look at individual stocks which are bargain bets at this point in time.