The markets slid sharply today in line with global peers due to the turmoil triggered by Dubai World's debt repayment deferral. Asian markets too closed down between 2% and 4%. However, Indian markets bucked the trend and were able to come off the day's lows, but ended in the red. The Nifty closed 62 points down while the Sensex ended with cuts of 207 points.
Infrastructure and infrastructure finance stocks were the biggest losers today as a result of that Dubai panic. One sector that held out today was the defensive pharma sector.
The market breadth was abysmal for most of the day today, closing with five declining stocks for every advancing stock on the NSE. Despite being the first day of a new F&O series, volumes were quite heavy with about 120,000 crores being clocked in trade.
Vijay Bhambwani, bsplindia.com says investors who have a waiting period of six months or more can look to invest in markets. "I still remain cautious on the market. There is a steep food price inflation. If you look back in time be it 1990-1991, 1997-1998, 1999, or 2007, you will se a dip in equity markets. Typically, these dips are very vicious. Retail participants may see the markets at mouthwatering levels still do not have free cash to support the market. So, you will see very sharp declines during these times. Mercifully, these sharp declines tend to be brief. The rallies that follow tend to be fairly steep thereafter. If you were to buy closer to 4,700, the downside pain from there is substantially limited."
Ajay Loganadan, Head - Investment Advisory Group, HSBC Private Banking, too is not perturbed by the happenings overseas. "If any, it might impact global flows over the near-term into emerging markets and India." He sees the markets finding support over the near-term and advises long-term investors to use any sort of dip as a buying opportunity.
Likewise, SP Tulsian of sptulsin.com too does not see a major impact of the Dubai spillover on Indian markets. He sees a mild negative impact on banking stock and a more severe impact on realty stocks.
Sectors to look at now:
Loganadan is bullish on the sugar space. "Fundamentally, there is very clear demand-supply mismatch. It is a cyclical business and we get into this cycle once every three or four years. Sugar companies should be able to command reasonable margins in the next 12-18 months. Right now, given the valuations and outlook for the next 12-18 months, we are overweight on sugar."
