The noted investment guru John Templeton once said, ?Its time to buy, when there is blood on the streets.? There is blood all over the place on Dalal Street, and maybe it’s time to buy and not panic. But how much blood is enough? There are varied opinions. James Rogers, the global investment guru, believes that the Indian stock market has entered a bear phase and it would continue on its downtrend and that value has not emerged yet.
Mayur Shah, a technical analyst, agrees, ”We are in a bear phase as the Sensex has broken the support level of 18,182 points. From now onwards the rally will be range bound. The first rally should be used to liquidate the position and thereafter go short. This bear phase is expected to continue for the whole year.?
There are optimists as well. Ajay Bagga, CIO of Lotus Mutual Fund, believes that there is still value available in the market. He says, ?At 17,000 levels with strong expected EPS growth and 4000 points of embedded value. The Sensex is at a 12-13 times earnings multiple. So at currently level there is a huge value and investors can take exposure for the long-term.?
Prasanth Prabhakaran, senior vice president at Kotak Securities, also adds, “The correction has not lead to a bear phase in the market. However, Sensex will consolidate at 16500-18000 levels.” Naval Bir Kumar, CIO of Standard Chartered Mutual Fund, believes that the market has corrected and valuations are now at a reasonable level as there were no fundamental changes in the growth story of Indian economy. It could be a good time for investors who missed the bus to re-enter the market and make the most of the correction, reckons Amit Sarup, head of wealth management serices at Religare. He has been advising investors to take fresh positions in the market and at best churn their portfolio.
A majority of the analysts and most of the fund managers and analysts reckon that the correction is not a bear phase. Bagga sums up, ?The major trigger for the market to bounce back heavily depends on the foreign inflows and the forthcoming budget in the month of February.? With the Federal Reserve announcing a huge 75 basis point cut. The trigger might be just around the corner.