Undervalued Stocks At Attractive Prices

The current market sentiment is weak and the stock prices have dropped considerably from their respective highs. This presents a very good opportunity to add high-quality stocks to your portfolio. Yogesh Supekar highlights how some of the consistent compounders are available at discounted prices post correction

- Yogesh Supekar

Gold is shining once again with the precious metal hitting its all-time high and is expected to gain some weight given the macroeconomic conditions and the geopolitical situations. Gold is also shining brighter as the other asset classes are not doing much recently. Both fixed income and equity have been underperforming the precious metal. It has been one of those rare instances where any investor who has diversified into fixed income and equity may have burned fingers in both the asset classes in 2022 and in 2023 so far. We are used to seeing a negative correlation between equity and fixed-income asset class but the story has been different recently.

In the US markets, according to Bloomberg, the 10-year average of bond-stock correlation is minus 25 per cent but it hit a 23-year high of positive 45 per cent in 2022. When we have a banking crisis in the developed world, things don’t look bright for financial assets. The banking crisis in the US and Europe is leading to a broad-based sell-off in the global equity markets. The sell-off in the Indian markets is in line with the global markets’ weakening sentiment. BSE Sensex is down by nearly 8 per cent from its highs while BSE Small-Cap index is down by 9 per cent. Several stocks have been battered down heavily, thus underperforming the key benchmark indices.

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