Last Updated: Monday, February 15, 2016

Nifty below 7100: Enjoy Bumper Discount Offers in Stock Market


What does recent global turmoil mean for Indian market? 

Before we come to its bright aspect, first see the worse part;

If FIIs sell off continues further in the near term, Indian stock market will be in more pain  as our market excessively relies on the impetus of FIIs. As of now, FIIs selling has been moderate and largely absorbed by DIIs, That's the reasons for the lack of buyers and short selling happened last week’s panic. Let's consider what will happen if a leading global banks default or China materially depreciates Yuan, of course FIIs sell off will intensify.

Other serious problem with Indian market is the lack of/slower revival in corporate performance.The third consecutive quarter of poor earnings and recovery still warns us. Even on the political front, the Modi government is suffering with too many political issues having obstacles in the pace of reforms, may it be GST, land acquisition bill or anything else.

‘The best returns are availed on stocks purchased during market mayhem.'

Let's now consider on the good part;

With every sell off valuations are getting reasonably cheaper, even with conservative targets. Though it is not possible to time the market and to say exactly the time span of an earnings recovery yet with expected more than 20% CAGR in the years to follow the journey undoubtedly spell a golden phase for the companies. Financial year 2016 seems to be a hard year for the index and so for the investors. At the same time it will also be a fabulous year for the investors seeking to accumulate value picks at a discounted rate. India being the world’s fastest growing economy having reasonable macros to a country of an superb demographic profile, there are many things going for value investors.

The best part is by RBI Governor Mr. Raghuram Rajan has been fast tracking the cleanup of bank balance sheets. Never mind the near term impact of stock market, the Mr. Rajan's action will do wonders for our economy and so the stock market in the long term.

As a value investor you should see the glass half full, almost all large caps are at a discount phase. There is bumper sale everywhere in stock market and you have sufficient time to avail these discounts and offers as the sale is not going to end in a hurry. So even at current levels, one should not be in a hurry to buy the stocks of the companies having bad stories or having poor managements. one should gradually accumulate stocks which are fundamentally sound and available at discounts. At the same time many individual stocks may have been bottom-out earlier than our market had. But the best part is that you need not buy all at once.

The first such opportunity is Tata Motors, which has fallen down significantly which can be recovered with three to four years of EBITDA. 

In private banking space few among them are HDFC Bank, yes bank and Kotak Bank who tower above the rest of the private and PSU banks with their high growth, retail franchise and resilient asset quality. They will gain market share from others and deserve high valuation premiums. 

In PSUs one and only value investment will be SBI which have delivered good numbers in recent quarters where government as well as management are committed to cope up with NPA issues.

Reliance is another large cap with many positive things going for this stock. Benefited in number of ways like; tremendous results, falling crude oil advantage, efficient management etc. 

In Auto space Look at Eicher Motor and Ashok Leyland which have respected its 200 DMA many times, even in market carnage it succeed to sustain above it due to excellent numbers QoQ and yoy.

If you need help in selecting good stocks for your portfolio, feel free to drop a line here in comment box mentioning your email id.

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  1. Dear Sachin/Kalpesh
    Just thought you would like to know that I have just sent you a mail containing some value picks in large caps. Please mention your specific queries here. To get all the posts of this blog delivered in your inbox pls subscribe by email (pls refer top right side of the blog). Btw Thanks for sparing your precious time here.

  2. Hi - did not receive mail, pls confirm from which Id it's send