Tread carefully on Dalal Street

The Sensex plummeted by 946.18 points or 3.38 per cent to 27,011.31 last month, making investors poorer by Rs 1.78 lakh crore. Despite the steep fall, experts feel investors should remain extremely cautious in the short term, as there are no immediate positive triggers to boost the equity markets sentiment.

However, they claim that investors could look at beaten down stocks in the large cap and mid cap segments to add to their portfolio with medium to long-term perspective. “The economy hasn’t moved up as expected and the market valuations are ahead of fundamentals. Moreover, the fourth quarter results of India Inc. have turned out to be a disappointment barring few exceptions. So there is no immediate triggers to move the markets on the higher side and short term investors have to remain extremely cautious,” said Sudip Bandyopadhyay, managing director and CEO Destimoney Securities.

“It is better to stick to fundamentally good large cap companies in the near term. Some of the stocks have corrected very sharply over the last few days. This is a good opportunity to invest in those with a longer-term perspective,” he added.

S. Krishna Kumar, the head of equity at Sundaram Mutual Fund, said that the equity indices are not providing a true picture of the market as a lot of stocks have corrected more than the indices from their recent peaks. From an asset allocation point of view, Mr Kumar said it is the right opportunity to enter the market.

“Based on individuals risk appetite, they can allocate money both to large cap and mid cap stocks as India’s long term growth story is still intact. Companies in sectors such as automobile, IT and cement to name a few have witnessed steep correction, which is a good opportunity to enter,” added Mr Kumar.