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'Sell-off in HDFC, HDFC Bank indicates FIIs rebalancing portfolio; volatility to remain high'

Big opportunities will come over time, but the market volatility is not going to end anytime soon, says Amit Khurana of Dolat Capital.

March 30, 2020 / 06:30 PM IST

The equity market started off the week with a significant fall as the rising coronavirus cases and spectre of a prolonged lockdown worried investors.

IMF chief Kristalina Georgieva's statement last week that the world had entered into a recession that would be worst than the one in 2009 also dented sentiment.

The Sensex corrected 1,375 points due to major selling in Bajaj Finance (down 11.95 percent), HDFC (down 10.92 percent), HDFC Bank (down 7.96 percent), ICICI Bank (down 7.67 percent) and Kotak Mahindra Bank (down 7.29 percent).

"Today there could be a significant amount of rebalancing of the portfolio by some of FIIs, which is clearly reflected in HDFC, HDFC Bank which have significant weightages," Amit Khurana, Head of Equities, Dolat Capital, told CNBC-TV18.

He said the part of selling that has been happening because of some rebalancing by FIIs, considering the selling pressure they are witnessing in some of other markets and some of other emerging markets portfolio. "This is the street buzz we came across and this is quite aggressive selling we have been seeing now," Khurana said.

On the collapse of Bajaj Finance and HDFC kind of stocks, he said part of the selloff ascribed to the fundamental impact on the franchise given the kind of economic lockdown. "It will definitely have a significant impact on asset quality and growth projections that one can figure out," Khurana said.

According to him, the last 10-15 percent of fall in the index heavyweights could also be driven by technical collapse. "And therefore we will utilise these opportunities to build up positions," he said.

Khurana feels these big opportunities will come over the time but the market volatility is not going to go out anytime soon.

While advising, he said one should not rush to allocate full amount but at the same time one will also have to have high conviction levels. "One should remain cautious and buy quality stocks in very small quantities here and there."

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first published: Mar 30, 2020 06:30 pm