SINCE the announcement of recent Union Budget the stock markets -- Sensex and Nifty -- have been continuously falling due to lack of any big bang reforms to boost economic growth. Both domestic and foreign investors were hoping for a road map which would propel the economy on a higher growth trajectory. This did not happen and investor sentiment had been badly hurt. “Despite the slump in share prices, investors should look at this fall as an opportunity to enter and start buying in small quantities at these levels,” said CA Kailash Jogani while talking to The Hitavada. He felt that there is limited downfall for the markets from these levels.
“The slowdown in the economy is a natural phenomena and is most likely to pick-up after a few quarters. A lot of shares have fallen have fallen 50 per cent to 60 per cent and many more are at their life time lows. Under such circumstances, investors who are already invested should not panic and sell their holdings. This will erode their capital.
They need to sit tight and wait for recovery in the market. For new investors this is great opportunity to buy on dips of share of fundamentally sound companies. The markets may correct further but the downfall seems limited,” he pointed out. The Government needs to relook at the hike of Surcharge imposed on income of FIIs, lower interest rates, lower Corporate Tax and increase expenditure on infrastructure. Government should put money in hands of people by increasing lending through banks which will stimulate demand of products and services. He expects Nifty to touch 12,000 level within two years. According to CA T S Rawal the downtrend is limited and the share prices would consolidate for a few months from here and start climbing up again.
“When everyone is fearful you should be greedy. The mantra to making a huge fortune is to buy low and sell high,” he said. Investors with a time horizon of one to two years should start hunting for shares of fundamentally sound companies. There are a large number of good companies with bright future prospects, he added. CA Julfesh Shah, a expert on stock markets said mixed corporate earnings, weak domestic and global cues and continuous selling by foreign portfolio investors (FPIs) were among the key reasons for such drastic fall in the markets.
Amid the weakening market situation one can foresee the rebirth of opportunities and investors cautiously can start accumulating in small lots in select fundamentally strong stocks with a purpose of holding it for at least 1 year. One should also take into account that the global markets also witnessed the sell-off on the back of escalating trade tensions and Fed rate cut last week. Now, after the Fed’s rate cut, market participants will watch out for RBI’s monetary policy stance coming this week with a question in mind that whether RBI cut the rates. Shah said that a large part of the correction is now behind us and hereon market should stabilise and then look for revival signs and growth.
But a downfall of couple of more percentage points from here would be good opportunity for investors to buy in. The investors are hopeful that the market will witness earnings recovery in second half of FY20. CA Varun Parekh was also of the same view that investors with five year time frame should scout for companies which are leaders in their fields. Govt should lower GST rates which should stimulate economy. He is bullish on IT and private banking sectors.