After the Sensex and Nifty plunged once again on Friday reacting to to rising global volatility, with the 30-shares Sensex tumbling by more than 500 points to open at 34,002 while 50-share Nifty fell more than 177 points, Geoff Lewis of Manulife AMC says that this is not a time to panic even if it’s a sharp correction. In an interview to CNBC TV18, Geoff Lewis, Senior Strategist (Asia), Capital Markets & Strategy Team says that he expects a larger than 5% correction in the global markets, as the markets had run-up considerably in the past. Yesterday, Saurabh Mukherjea of Ambit Capital told in an interview to ET Now, “We are just beginning the fall..hard to know how far this market will fall, but if largecaps fall around 15 per cent and smallcaps and midcaps fall around 30 per cent, we get to some semblance of sanity on valuations,” adding that he believes the fair value for the Sensex is around 30,000. As investors may get jittery about about any further corrections, experts say that they should not go into panic mode. We take a closer look at what experts have to say.
Underlying fundamentals strong in United States
According to a recent Goldman Sachs report, the ongoing sell-off is not the beginning of any major bear market or a repeat of earlier financial crisis, as corporate earnings are on the path of strong recovery on the back of accelerating GDP growth, rising commodity prices, and a weaker than expected U.S. dollar. “This is a correction and not a start of a major bear market,” Katie Koch pointed out yesterday. On similar lines, Geoff Lewis told CNBC TV18 that the underlying fundamentals in the United States are strong. “Earnings and macro-economic indicators continue to be strong,” Geoff Lewis said.
Emerging market equities more resilient to correction
While there’s rising global volatility, experts point out that emerging markets have been more resilient to corrections. “We have been saying that for quite some time and we have been encouraging clients for last few months to reduce US exposure and allocate more internationally to both developed and emerging markets,” Katie Koch of Goldman Sachs told ET Now yesterday. In the same interview, Katie Koch also said that among emerging markets, India has been their favourite. “Our clients are definitely more positive about the Indian economy and more positive about the corporates based in India who have been able to translate that superior GDP growth into great earnings,” the expert said. Geoff Lewis of Manulife AMC too concurred that emerging markets have been more resilient than their global peers.