Investors' pain has intensified as Indian markets have underperformed their global peers. Yogesh Supekar & DSIJ Team identify what is haunting the markets and explain what is the best any investor can do in such testing times
With Sensex slipping below 37,500 and touching five-month low and Nifty Midcap index touching 30-month low, investors who were already somber are now feeling frustrated. But wait, isn’t it good news that the stocks prices have finally fallen and that the valuations have started to look attractive after a long-long time? Up till now, what most of the investors argued is that the valuations are stretched and the earnings are not supporting the premium valuations--well, now we have the prices dropping AND attractive valuations. Is valuation attractive enough for investors to start investing? This is the most important assessment here. If we first look at what is happening in the auto space, we find that almost all of the auto stocks are trading on an average 20 percent below their respective 200 DMA (daily moving average). This is indicative of extreme weakness in the sector. Technically speaking, in the short term at least, one can definitely expect some sort of pull-back in these set of stocks. For any long-term investor who has an investment (portfolio) horizon of at least 5 years, it is times like these that provide contrarian opportunities. Investors first need to understand what is plaguing the markets and in which sectors can the situation deteriorate from hereon.
What is bothering the market?
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