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Sensex, Nifty crash: Dalal Street bloodbath an opportunity or risk? Top expert tips on what small investors should do
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Sensex and Nifty are logging their sixth straight session of losses and markets are in deep red, with investors losing over Rs 5 lakh crore in just today’s trade so far. Sensex has tanked over 2,600 points since October, a month that is usually associated with the Dalal Street gaining. Nifty 50 closed the day today at 18,857, down over 260 points, while Sensex closed at 63,148, down 900 points.
The Indian economy continues to remain one of the fastest growing world economies, yet markets are in free fall due to global uncertainties. The ongoing Israel-Hamas war and the rise in US bond yields has led global markets to correct, and Indian equities are no different.
So what is driving the Sensex and Nifty 50 fall and what should retail investors do amidst the market mayhem? We ask experts
Why are Sensex & Nifty tanking?
Narendra Solanki, Head Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers believes that global concerns are the cause of the market slide. “The recent fall in the markets has primarily been due to global concerns around geopolitical risks as well as weak risk appetite in developed markets due to higher US treasury rates,” he tells TOI.
Raj Vyas, VP – Research, Teji Mandi (SEBI-registered subsidiary of Motilal Oswal) explains, “The valuations for broader markets, following a strong surge to 33k levels on Sept 11, 2023, now show signs of overvaluation. The breadth has been poor and the rally has gotten narrower in terms of returns against benchmark indices since then; this week’s Monday mayhem was the worst fall of 2023, where many stocks were down more than 3%.”
“These are some indications that people are worried about the broader markets, and those who entered into this recently driven by FOMO are likely to witness some rookie moves in case of further pullback, if any,” Vyas tells TOI.
According to Gaurav Dua, Head – Capital Market Strategy, Sharekhan by BNP Paribas, markets go through corrections in a range of 8-12% from the peak levels every year, sometimes even more than once in a year.
“These pullbacks tend to be an opportunity in hindsight. This correction is no different as per base case scenario. So the bulk of the pain could be priced in for the large-cap stocks,” Dua told TOI.
However, he cautioned that the biggest risk remains the global growth uncertainties and further escalation in geopolitical issues.
Indian equity market outlook: What should investors do?
Dua of Sharekhan by BNP Paribas believes that the correction could be much more pronounced and prolonged in the broader market. “The CNX Small-cap and CNX Micro-cap indices rallied by over 40% from March low and quite a few stocks have run ahead of fundamentals,” he says. “That’s where the investors need to be very selective and not try to average in highly volatile momentum led stocks,” he adds.
Dua also says that while it is not possible to exactly time the markets, investors with at least 18-24 months of investment horizon should start nibbling in good quality stocks as the valuation is quite supportive now.
Narendra Solanki sees the current market rout as an opportunity for investors. “From a domestic perspective it is a good opportunity for long term investors to deploy fresh funds in good growth stocks. We do not see any long term impact on the Indian economy,” he says.
Vyas of Teji Mandi says that going by several data points as well, large caps are reasonably valued when compared to the broader markets category and with tables turning in favor of large-cap companies and the kind of return witnessed in the last 1 month or so, there could be some re-rating in stocks as well.
“This assertion is supported by the fact that, despite the market rally since April and improved macroeconomic conditions, numerous large-cap stocks have not fully participated, which provides a cushion for the downside,” he says.
Vyas says that in the current market scenario, it is advisable for investors to focus on value stocks, specifically quality stocks. “Quality stocks are paramount at this stage, and stock selection should be guided by earnings visibility and a well-thought-out asset allocation strategy,” he says. “For those with a long-term investment horizon, short-term corrections need not be a cause for concern, given the favorable economic growth trajectory. Make prudent decisions based on quality, earnings potential, and your long-term financial objectives,” he adds.
The Indian economy continues to remain one of the fastest growing world economies, yet markets are in free fall due to global uncertainties. The ongoing Israel-Hamas war and the rise in US bond yields has led global markets to correct, and Indian equities are no different.
So what is driving the Sensex and Nifty 50 fall and what should retail investors do amidst the market mayhem? We ask experts
Why are Sensex & Nifty tanking?
Narendra Solanki, Head Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers believes that global concerns are the cause of the market slide. “The recent fall in the markets has primarily been due to global concerns around geopolitical risks as well as weak risk appetite in developed markets due to higher US treasury rates,” he tells TOI.
Raj Vyas, VP – Research, Teji Mandi (SEBI-registered subsidiary of Motilal Oswal) explains, “The valuations for broader markets, following a strong surge to 33k levels on Sept 11, 2023, now show signs of overvaluation. The breadth has been poor and the rally has gotten narrower in terms of returns against benchmark indices since then; this week’s Monday mayhem was the worst fall of 2023, where many stocks were down more than 3%.”
“These are some indications that people are worried about the broader markets, and those who entered into this recently driven by FOMO are likely to witness some rookie moves in case of further pullback, if any,” Vyas tells TOI.
According to Gaurav Dua, Head – Capital Market Strategy, Sharekhan by BNP Paribas, markets go through corrections in a range of 8-12% from the peak levels every year, sometimes even more than once in a year.
“These pullbacks tend to be an opportunity in hindsight. This correction is no different as per base case scenario. So the bulk of the pain could be priced in for the large-cap stocks,” Dua told TOI.
However, he cautioned that the biggest risk remains the global growth uncertainties and further escalation in geopolitical issues.
Indian equity market outlook: What should investors do?
Dua of Sharekhan by BNP Paribas believes that the correction could be much more pronounced and prolonged in the broader market. “The CNX Small-cap and CNX Micro-cap indices rallied by over 40% from March low and quite a few stocks have run ahead of fundamentals,” he says. “That’s where the investors need to be very selective and not try to average in highly volatile momentum led stocks,” he adds.
Dua also says that while it is not possible to exactly time the markets, investors with at least 18-24 months of investment horizon should start nibbling in good quality stocks as the valuation is quite supportive now.
Narendra Solanki sees the current market rout as an opportunity for investors. “From a domestic perspective it is a good opportunity for long term investors to deploy fresh funds in good growth stocks. We do not see any long term impact on the Indian economy,” he says.
Vyas of Teji Mandi says that going by several data points as well, large caps are reasonably valued when compared to the broader markets category and with tables turning in favor of large-cap companies and the kind of return witnessed in the last 1 month or so, there could be some re-rating in stocks as well.
“This assertion is supported by the fact that, despite the market rally since April and improved macroeconomic conditions, numerous large-cap stocks have not fully participated, which provides a cushion for the downside,” he says.
Vyas says that in the current market scenario, it is advisable for investors to focus on value stocks, specifically quality stocks. “Quality stocks are paramount at this stage, and stock selection should be guided by earnings visibility and a well-thought-out asset allocation strategy,” he says. “For those with a long-term investment horizon, short-term corrections need not be a cause for concern, given the favorable economic growth trajectory. Make prudent decisions based on quality, earnings potential, and your long-term financial objectives,” he adds.
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