Investors hunt for bargain picks after mkt tumble

Time for caution, say experts; warn that it’s too early to predict market movement

On a day when the market crashed over 3 per cent, brokers were inundated with queries from customers on bargain hunts, especially in the large-cap space. There was renewed interest in banking, IT, pharmaceutical, and infrastructure stocks.

On Monday, banking, media, realty, metal, and auto stocks fell the most, with the Bank Nifty falling as much as 5.1 per cent.

“We are getting a lot of queries from clients on what to buy. They have seen that last year, after a crash stocks delivered 30-40 per cent returns within a few weeks. Investors are hoping gains will be similar this time too,” said B Gopkumar, chief executive officer, Axis Securities.

Over the last year, defensive sectors recovered faster than others, but cyclical and rate-sensitive sectors have started outperforming the market and have been in a catch-up rally, especially after the Union Budget.

“Investors should continue with their existing investments and may look at opportunistic buys provided it is done in a calibrated manner,” said Lav Chaturvedi, CEO, Reliance Securities.

Experts, however, believe that it is too early to predict which way the markets will move in the coming days and a lot will depend on possible lockdowns and the progress of vaccination.

A buy-on-dips mood has prevailed for some time now, said experts.

“It is time to be cautious,” said Rahul Rege, business head — retail, Emkay Global Financial Services. “Some investors have become overconfident and unmindful of the downside risks that prevail currently. This is not the right time to build trading positions or to time the market.”

Benchmark indices slumped to a 10-week low as daily Covid19 infections spiked. Investors were worried about the economic fallout of the fresh surge and the subsequent restrictions announced by several state governments. Advance decline ratio plunged to the lowest since February 28, indicating the panic in the broader markets.

“These developments could jeopardise the market’s assumption of around 11 per cent GDP growth and above 30 per cent Nifty earnings growth,” said Deepak Jasani, head of retail research, HDFC Securities.

Axis Securities’ market valuation index has reverted to the caution zone. Stock picking and sector rotation are key at the current level to generate outperformance, the brokerage said in a recent note.