Since time immemorial we have been told that the best time to buy equities is when the markets are down.
We nod our heads sagely when we hear these homilies. Yet, invariably, when the markets correct, we freeze in fear and go into a shell.
The result is that we miss out on golden buying opportunities.
Then, when the markets surge, we look back ruefully, castigating ourselves for not taking advantage of the opportunity.
This time, we have to listen to the experts who have rallied to counsel us. We need to come of our burrows and put our money to work.
Nilesh Shah of Kotak AMC has fired the first salvo. He has given a detailed explanation on why the FIIs are selling and what has caused the correction. The bottom line of his advice is that the correction is a “technical” one and that it provides an opportunity for investors to enter the market and load up on top-quality stocks. “One should not lose this opportunity” he says.
Nimesh Shah of ICICI Prudential echoed the same advice. He said that volatility is an “opportunity” and that he is “happy” with it. He pointed out that historically, whenever FIIs have sold for some technical reasons or problems in the West that is the best time to buy India. “It is proved historically that whenever FIIs sold if one buys there is a good chance of making money” Nimesh added.
Ridham Desai of Morgan Stanley has also come out with all guns blazing. He pointed out that he is “steadfastly bullish” and that “this is just a correction in the bull market” and that “it has given opportunity for those who got left out”. Ridham Desai called it a “super opportunity for people to buy stocks”.
“I am very bullish, so I stay that way and these are corrections, they ought to be coming in every bull market …. this correction has flushed out a lot of big bulls, it has flushed out a lot of people with low conviction. So it has formed a nice base. We can never pinpoint where exactly it bottoms but people who buy stocks at these levels should be okay in a year or two” Ridham said.
Akash Prakash, founder of Amansa Capital, has a ring-side view of what the FIIs are up to. He explained that many fund managers are rated on the basis of their short-term performance. So, if one market starts underperforming and another starts outperforming, everybody rushes to the outperforming one in the hope of being catch some of the gains. Presently, the Chinese and Russian markets are outperforming and so everyone is rushing there is his theory.
Samir Arora, whiz-kid with Helios Capital, endorsed this theory. He added that when China etc stop outperforming, there would be a reverse flow of capital into India. This process takes between three to six months he said.
So, the consensus amongst the experts is that the time is ripe for us to deploy our money into top-quality stocks and sit tight!