Ditch roses, buy largecaps below Rs 500/sh this Valentine's Day

Moneycontrol Bureau

As bears are smearing Dalal Street with red blood, the town, too, is painted red. And that red is the colour of love celebrating Saint Valentine's birthday in February. Well, the love affair of equity markets with Budget is yet to spark this time as Europe and Asian markets play villains, why not make most of the bloodshed. On Thursday, Rs 3 lakh crore was wiped out from market with the Sensex losing 800 points in a single day, marking the biggest single-day fall in 6 months. The Nifty breached 7000 mark for the first time in 21 months. From January, the 50-share index has lost nearly 1000 points.

Banks were the biggest culprits once again as the index is down 25.60 percent in 6 months and 12.80 percent lower in a one month. Madhusudhan Kela, Chief Investment Strategist, Reliance Capital says that the meltdown in share prices is providing an excellent entry point for investors looking to buy high quality names. "Don't go ahead and buy everything at one go," cautions Kela, but advises investors to start accumulating stocks from a two to three year perspective.While the valuations have become cheap due to current volatility, the market even at 14x PE multiple is not looking cheap, says CNBC-TV18’s Consulting Editor Udayan Mukherjee. A 20 percent fall from the peak qualifies as a bear market technically, he adds.

Bluechips like Tata Motors, Tata Steel, SBI, ITC, BHEL and Coal India are reeling under after disappointing December quarter results. Bad loans or asset quality are causing a lot of trouble for government-run banks. SBI reported a massive 67 percent fall in consolidated net profit at Rs 1259.49 crore in the quarter to December after it classified loans worth Rs 20692 crore as bad loans.