Nifty ended February with a loss of 2% – its 3rd consecutive month of decline whereas Sensex closed the month with a per cent fall as weakness continued to persist on global as well as domestic stock markets led by worry over prolonged interest rate cycle, global uncertainty, consistent FIIs selling and central banks around the world being hawkish to tame rigid inflation.
“Even though the institutional net buying is positive, the market has been trending down on negative sentiments and increasing short build up in the system. Retail/HNI activity is subdued unlike in the last 2 years. There are no positive triggers to take the market higher, but short covering may happen since the market is oversold. The only sensible investment strategy in this highly uncertain time is to slowly accumulate high quality stocks for the long-term, ignoring short-term volatility. Banks, capital goods and IT stocks can give good returns for the medium to long run,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
In the last 20 years, Indian stock markets have never been down for 4 months consecutively – Not even in 2008 or 2020 – so history is in your favour in March after three consecutive negative months of Dec, Jan, Feb, said well-known research analyst Sandip Sabharwal in a tweet on Tuesday.
“Markets are falling continuously, should we sell? This is one of my most encountered questions It defies logic as why should you sell if things are getting cheaper Yes we need to sell if fundamentals are deteriorating but if they are intact and stock is cheaper its stronger buy,” Sabrawal said in another tweet on Tuesday.
Data suggests that Foreign portfolio investors (FPIs) have so far offloaded ₹32,500 crore ($3.93 billion) worth of Indian equities this year. Global markets have also remained muted in the recent months.
“The fall in US stocks will continue to have an impact on FPI money coming to India and can also trigger a 5-7% fall in the Index. We believe that this should be the last fall before we see a reversal of trend and a good rally starting later this calendar year. We would suggest investors to not leverage in these times, not take very aggressive calls in either side of the markets, and buy in staggered manner when you see deeper cuts. The broader market valuations are turning very comfortable while most of the companies are continuing with their capex plans,” said Divam Sharma, Founder at Green Portfolio.