Market Veterans Suggest Top Themes And Sectors To 'Buy The Dip'

Market strategists and technical analysts suggest investors to ‘buy the dip’ in Indian stocks.

The domestic benchmarks tumbled the most in nine months intraday on Monday, tracking the global peers, amid foreign investor selling, political tensions in Ukraine, the U.S. Fed tapering concerns and costlier oil.

While the indices recovered some of the losses by the end of trade on Monday, they still logged their worst decline in nearly two months.

Here’s what the market veterans suggest investors should do in a conversation on BloombergQuint’s Twitter Spaces, hosted by Niraj Shah.

Mihir Vora, chief investment officer and senior director at Max Life Insurance Co.

The time is right to selectively buy the dip. “I would play the domestic theme. We have spent the last two years being bullish on export-related themes such as IT and chemicals. With the global correction now, it’s time to look inwards at the domestic theme that has underperformed.”

Investors should not only look at consumer stocks, but also domestic investments theme.

Vikas Khemani, founder at Carnelian Asset Advisors

The time is opportune to buy into the markets if investors have a long investing horizon. “I don’t see more than a 5-7% correction sustaining for long. Certain sectors have seen correction and my theme for the year was sectoral allocation anyway, so we can play that out.”

Investors should remain wary of new-age stocks with heightened valuations. He, however, is positive on IT and related services.

Gurmeet Chadha, co-founder at Complete Circle Consultants

The current correction seems like a bit of an overreaction. “Tapering is not something new. This was expected, easy money can’t keep getting printed.”

The market is also differentiating. Certain pockets are being punished more than the others. “New-age firms, firms not showing profits, high P/E stocks and lofty valuations are being corrected.”

He, too, concurred that it should be a buy-on-dips market, given the kind of earnings companies such as Reliance Industries Ltd., ICICI Bank Ltd. and Asian Paints Ltd. have reported.

Chadha said he was looking forward to Central Depository Services Ltd.’s earnings, which will only see more business in the run-up to Life Insurance Corp.’s maiden offer. He’s also looking at active ingredient makers such as Divi’s Laboratories Ltd., certain PSUs such as State Bank of India and IRCTC Ltd., and home improvement stocks like Asian Paints.

CK Narayan, technical analyst and founder of Growth Avenues, Chartadvise, and NeoTrader

The worst in terms of the rout seems to be over and done with.

With the formation of a 600-point range on Monday on top of a five-day, 800-point decline last week, the declining trend seems to have come to a halt.

“I sense much of the selling that had to happen, has happened. Unless there’s something drastically wrong, the long range bar today [Monday] says the rout is pretty much over. I don’t want to be a seller at this juncture. Provided I have the capital to withstand any further possible gyrations, I’d be a buyer.”

His clients have put in more money on Monday, and Narayan said there are still plenty of buying opportunities. His favourite theme is large mid-cap stocks.

Narayan said he has bought ICICI Bank, going by the strong earnings reported. “I haven’t bought Axis Bank Ltd., but the earnings are strong. I’m not too gung-ho on financials, rather very selective. Another pet theme is industrial or capital goods.”

He also likes Polycab India Ltd. and will definitely look at it in the near future.

Listen in to the complete Twitter Spaces conversation here: