Rs 30,000 Crore Waiting To Be Invested In Indian Equities, Says Motilal Oswal
Should you panic or should you buy? Market experts tell you what to do.
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At least Rs 30,000 crore is waiting to be invested in the Indian markets by domestic institutions, and Motilal Oswal AMC thinks the benchmark Sensex’s 1,100-point drop may be the opportunity the investors were looking for.
The one concern clients and investors have had about the Indian market is that valuations were too expensive, Manish Sonthalia, chief investment officer at Motilal Oswal AMC, told BloombergQuint in an interaction.
Just before the budget, the domestic institutions were sitting on around Rs 30,000 crore of cash. If you were to take into perspective the global capital waiting to invest in India, and they were just sitting on the sidelines due to valuations, they will only find it more comfortable to put in after the markets have corrected 10-15 percent.Manish Sonthalia, Chief Investment Officer, Motilal Oswal AMC
Affordable housing, value migrating away from public sector banks to private banks, the GST opportunity and the doubling of farm income are the four main themes Sonthalia would bet on.
India’s benchmark Sensex index fell more than 1,000 points, on track for the fifth worst single-day fall. The Indian stock market reacted to a global sell-off that started with the U.S. markets and spread to Asia. The Dow Jones Industrial Average tumbled as much as 1,600 yesterday.
Indian investors should stay calm and refrain from selling their equities, said well-known portfolio manager Porinju Veliyath in a conversation with BloombergQuint. “This is a normal correction and we’ve seen it so many times.”
Other investors agreed that India’s growth story is still secure. Here’s what they suggested.
Hiren Ved, Director & CIO, Alchemy Capital Management
India is at the cusp of a recovery from the growth slowdown, said Ved. “The markets are transitioning from PE (price-to-earnings multiple) expansion phase to an earnings growth phase, and I think this transition is likely to be painful in the short to medium-term and, therefore, you might see sharp corrections.”
On buying opportunities, Ved said Alchemy is very stock specific, and definitely a buyer at lower levels. “We have some cash with us, and we are likely to deploy that.” He said the wealth management firm will consider stocks within consumer discretionary, autos, select private financials and technology sectors.
UR Bhat, Managing Director, Dalton Capital
Large-cap stocks are the place to stay invested in, unless there are particular companies that come up with phenomenal earnings, said Bhat. “As a class, mid and small caps are overextended,” he said.
“One should continue to be invested in autos because they are the ones producing phenomenal numbers even when there is a downturn in the economy,” he said. “When the rural demand picks up, this is one sub-sector where there will be a lot of activity. Non PSU banks also offer phenomenal opportunities.”