Good idea to buy Nifty BeEs: HDFC Sec

The only safe investment bet today is putting your money in the index, says VK Sharma, fundamental analyst, HDFC Securities. Talking to CNBC-TV18, he says that no matter how good the fundamentals of a company are, there is no guarantee in the current market that the scrip’s price is not going to fall more. 

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He added that fundamentally, although the Nifty is at a level which is 115 per cent higher than the level at which it was in March 2009, 25 per cent of the market on the BSE is lower than those levels. He feels that is essentially what is killing investor sentiment. Here is the edited transript of Sharma's interview with CNBC-TV18 Q: How are the technicals of this market arranged? Are you getting a sense that in the Futures and Options (F&O) space or at least in some stock futures, do you could see some very sharp cuts? Some of these infra, real estate names are seeing rising open interest and severe falls?
A: During the course of the day. I am a fundamental analyst. I do see technicals and derivatives in the morning. So my sense is if you look at the technicals and you have spoken about the two or three day rally in the market, the charts were in a massive bullish mood. Largely based upon the fact that there was a positive divergence on the charts and for another 30-50 points if the market bounces back, that is still there.  However, beyond that it will be very difficult to keep it up, and people who have bought will necessarily sell. 
Look at derivatives. The last time I had a look, the open interest was at a low which was there in September 2009. So, there are no large positions which people want to exit. Whatever weakness is coming in from fresh shorts are happening with people who are trading technically, and is not based upon derivatives.  Fundamentally, although the Nifty is at a level of 115 per cent plus from the levels at which it was on the low of March 2009, 25 per cent of the markets on the BSE is lower than that. So, that is essentially what is killing the investors. Q: What is the advice then? We have seen this happen in 2008 as well. We have done some research to back it up. Are you getting a sense that the screen is looking very similar to the bear market of 2008 and in that case the retail investors especially should not go by this theory of buying the beaten-down stocks and should just stay away from some of these stocks?
A: We have looked at numerous years’ histories and the only place in this entire listed space where you feel comfortable or you will go on averaging as long as you want and not get insolvent is if you are putting your money in the index. However, you talk of any stock, no matter how good the fundamentals are you cannot say that stock is not going to fall more. So personally speaking, I have just bought Nifty Bees today. I will buy it double my quantity, maybe 5,250 and I will multiply it by four times when it goes to 4,800 – that is the only saner way.