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One of the fundamental principles of investing or wealth maximisation is to buy stocks at the right price which is difficult to achieve in a market that has been moving up since the last four years.
The current mayhem in the domestic stock market provides an opportunity to buy quality stocks at cheaper valuations. After the bloodbath in the last few days, which saw bouts of selling across the board, many experts believe that this is the right time to identify and pick good stocks, as valuations are fairly attractive relative to fundamentals.
Most investment experts believe that fundamentally nothing has changed and that India remains a long-term growth story with GDP expected to grow in excess of 8 per cent over the next few years.
Check out the more than 20 stocks (in the table below) that experts believe can make you a fine packet over time.
The domestic consumption-led demand augurs well for the economy as it largely insulates it from the potential slowdown in global growth and this should continue to reflect in the markets.
We spoke to experts to know whether it is the right time to invest and what, according to them, are the value picks. "We believe that one should play big in banking & financial services and capital goods & engineering services sectors as they have now come to very reasonable levels and provide compelling investment opportunities. If you look at such 6 sigma events in the past due to technical factors, the market has provided great investment opportunities. This is the right time to invest and one can expect 30-40 per cent returns, may be more, in next three to six months," said Vikas Khemani, co-head of institutional equities, Edelweiss Capital.
Amitabh Chakraborty, President-Equity, Religare Securities, said: "We believe the market is trying to find a bottom. The exogenous factor, such as US recession has in general caused risk aversion, so a few FIIs , especially hedge funds have sold. Additionally some large proprietory book players had to liquidate their position, not only in India but across Asia."
"India has been the best performing market until now, naturally in a liquidity squeeze back home, these pop book have turned sellers. We believe this week market will stabilize, and if volatility gets reduced, slowly market will recover, as the refund money from Reliance Power issue comes back to the system and the market builds on budget expectation in February," he added.
"There is no direct impact as banks in India are not exposed to CDOs with sub prime assets. However, India is exposed to global risk aversion because of anticipated deep recession in the US. Much of industrial growth last year was due to easy capital, mostly from the private equity and FCCB or through the QIP route. If that flow tapers off, as risk become costly, then India's growth story might come under risk., at least over a medium to long term perspective."
"We have advised our clients to adopt a wait and watch policy as there has been no change in fundamental macro story. If investors are holding sound micro story, they should avoid selling, as n our opinion this is not the right time to get out."
"As the market has fallen so much, recovery will be led by the blue chips. We believe Reliance Industries [Get Quote], L&T, ABB, SAIL [Get Quote], SBI [Get Quote] offer value, purely from price performance point of view. We like HDIL, KS Oil, HCC, MRPL, Opto Circuit and Punj Lloyd [Get Quote] in the mid-cap space."
Shahina Mukadam, head research, IDBI Capital, said: "The Profit booking and selling by FII's in the last couple of sessions has been a major factor in the sharp market correction. The markets recovered post lunch with support from the domestic institutions and mutual funds and we expect that the markets will stabilise at the current levels."
"The impact of the US subprime crisis on the financial sector is having its ripples across the world and selling is happening across global markets. Investors should start investing if not already doing so in the markets at the current levels and should buy fundamentally strong companies."
"Almost all sectors / stocks have corrected and a near term rebound is likely in blue chips in oil & gas / telecom / banks."
Most of market pundits prefer stocks in sectors like capital goods, power and power equipment, infrastructure, financial services and telecom.
These sectors provide long-term visibility and sustainable earnings growth. With regards to individual stocks, the experts recommend the following 'value' picks (see table: Value Picks).
VALUE PICKS FROM EXPERTS
Head of Researchm, ICICI Direct
Head of Research, Emkay Shares
Head of Research, India Infoline [Get Quote]
Co-Head of Institutional Equities, Edelweiss Capital
Jaiprakash Associates [Get Quote]
Larsen & Toubro
Reliance Communications [Get Quote]
Tata Motors [Get Quote]
Punjab National Bank [Get Quote]
Tata Steel [Get Quote]
GMR Infrastructure [Get Quote]
Power Grid Corporation
Power Grid Corporation
Patel Engineering [Get Quote]
JSW Steel [Get Quote]
Aban Offshore [Get Quote]
ICICI Bank [Get Quote]
Lanco Infratech [Get Quote]
Voltas [Get Quote]
Oriental Bank of Commerce [Get Quote]
Indian Overseas Bank [Get Quote]
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