S&P BSE Sensex rose over 5,300 points from the day's low to the intraday high at 34,729.83, while Nifty 50 reclaimed the crucial 10,000-mark. Amid this high volatility in the markets, analysts advise investors to buy stocks in tranches.
In Friday’s freaky trade, Indian share market hit a lower circuit in the opening deals following which trading was halted for 45 minutes. After resuming the trade, Sensex and Nifty staged the biggest single-day recovery and sprung back into green. S&P BSE Sensex rose over 5,300 points from the day’s low to the intraday high at 34,729.83, while Nifty 50 reclaimed the crucial 10,000-mark. Amid this high volatility in the markets, analysts advise investors to buy stocks in tranches. “Indian markets are highly volatile but there are fundamentally sound stocks that are available at a reasonable valuation. Therefore, investors can start building a long term portfolio by investing gradually in selected counters but in a staggered manner,” Ajit Mishra, VP Research, Religare Broking said.
Earlier, in the opening deals, Sensex slipped below the 30,000-mark. To Investors who are in two minds thinking if it is a good time to invest, analyst suggests to stick to good quality stocks. They must “focus more on high cash rich companies or high cash generation companies, market’s leaders and other companies who have built higher entry barriers in their business models,” Narendra Solanki, AVP- Equity Research, Anand Rathi Shares and Stock Brokers said.
What should be investors’ strategy?
Domestic equity benchmarks Sensex and Nifty swung wildly between gain and loss in Friday’s session. Even after a sharp rebound from lows, Vishal Wagh, Research Head at Bonanza Portfolio Ltd, said that the investors should invest in a staggered manner in fundamentally strong scrips. “One can also invest in Niftybees in such scenarios. Trading should be avoided. And the horizon should be higher than 3-5 years,” he added.
While those “investors already having positions in fundamentally sound stocks should continue to hold their investments”, said Ajit Mishra, adding that for fresh investments, investors can look to invest at least 20% of the capital in the fundamentally sound stocks across sectors.
Has volatility subsided?
At this time, when there is coronavirus-led global sell-off, market watchers say it is difficult to predict if volatility has subsided. “We cannot say that volatility has subsided completely as the market is still being driven by global cues which continue to be muted. However, intervention by the US and Europe government in the form of stimulus measures as well as any further relief measures in the upcoming FED meet could help curb volatility to a certain extent in the coming days,” Ajit Mishra said.
On the other hand, Vishal Wagh believes that volatility may continue amid high news flow. “The news is not only from domestic but it is also coming from global markets. Higher volatility is very good for longer-term investors as it creates multiple opportunities to invest,” he further added. As far as further slide in the markets is concerned, analysts expect further downside as coronavirus and its impact on the economy, have not subsided yet. Along with these, other global cues have also continued to dictate the Indian bourses.