Nitin Raheja, CIO, Rada Advisors said the markets are looking weak at this point of time. He told CNBC-TV18 that this is the reason why bad news is getting exaggerated and good news is getting discounted.

There is a complete crisis of confidence in the market and nobody wants to have anything to do with equity, he stated. 

According to him, if there are stocks which are going to be 10% or 15% cheaper in a few days, it is advisable to start nibbling into the market and get in, in a very slow and gradual manner. 

Raheja advised that investors start nibbling into the market and enter in a slow and gradual manner. 

Excerpts from CNBC-TV18’s exclusive interview with Nitin Raheja:

Q: How are you reading the situation right now?

A: Clearly, the markets, once they breach their 15,300 psychological support levels, are looking very weak at this point of time. That is the reason one is seeing bad news getting exaggerated and good news is being discounted.

Even when we have global markets bouncing back, you don’t see sustenance out here. One is seeing a complete crisis of confidence in the market today. Equities have become a bad word and nobody wants to have anything to do with it.

One is seeing is a slow and a painful fall and this fall is not accompanied by volumes.

I was doing a simple analysis last week and broadly looked at a few stocks. What was very perceptible was that in the last two-weeks, on an average these companies have traded about 2% to 2.5% of their market cap, but had lost 22% of their market cap in terms of value.

It is really a market where there is no buyer at this point of time. So, small volumes are exaggerating falls in a lot of these companies. In that sense, a couple of companies have announced buybacks.

The buybacks might look very small. Apparently, when you look at a situation like this where 2% leads to 20% kind of erosion, it helps the stock. One is looking at some sort of support on the stock, in the form of some buying to start coming into the markets. If the promoters are the ones stepping in, then it is great.

Q: What is going to bring confidence back because we are going to step into earnings season?

A: If you look at the market in the last three-months, in terms of what happened, except for some bits of news on the macro front in the form of IIP and Capital Equipment sector where bad news has come in something on the US side, what has changed?

These were the same companies of which three-months ago people were putting out numbers on the optimistic side. There is really nothing on the ground that has changed. The GDP growth seen is almost 36% investment-led.

Investment-led growth doesn’t really fall off the table one fine day. On the ground, when you talk to engineering companies, infrastructure and construction side companies, the order book and the execution cycle remains where they are.

Q: Where does one take cover? Would you take cover in cash as of now? Would you go ahead and pick some midcaps?

A: I would cautiously start nibbling. I would hold cash definitely because at the end of the day, if you are getting something which is going to be 10% or 15% cheaper tomorrow or the day after, I would start nibbling into the market and get in a very slow and gradual manner. 

Q: What do make of cuts that we are seeing in the liquid universe right now? You have stocks already off about 50% from their 52-week highs and are tumbling even more. What's happening?

A: If you look at the kind of figures, which everybody gives out on the market, you are talking of a 10% downside. That kind of downside exists in markets at any given point of time. So, if you are saying that one cannot take 10% downside, one need not be in these markets.