Indian markets witnessed a sharp correction of more than 6% today due to a global sell off and the rout in China’s market. The BSE Sensex closed 1624 points down while Nifty dropped by 490 points. The nervousness in the Indian market was due to the selloff in Asian markets as China’s market corrected by 8% on Monday.
The rupee was also hit hard as it slid to a two year low of Rs. 66 against the dollar. Due to weakening demand in China and crude oversupply, the crude oil slipped below $40 today.
While Indian markets are expected to swing in line with global markets in the days to come, fund managers are optimistic that Indian markets will recover and this fall will prove to be a temporary blip.
We asked fund managers how Indian markets will be impacted by the global rout.
“We might see some more correction due to the global factors in the near future. But we expect the pullback would be sharp after this correction. As compared to 2012, India is in a much better position now. Also, our linkage to the China market is not very direct so we are better placed than other emerging economies. Investors should use this opportunity to buy stocks which are 6-8% down instead of buying when markets rebound,” said Taher Badshah, Senior Vice President & Co-head, Equity, Motilal Oswal Mutual Fund.
Harsha Upadhyaya, Chief Investment Officer (Equity), Kotak Mahindra Asset Management says “Panic has spread to Indian equities too on the back of global rout driven by Chinese actions. During this wave of selling, we may see a lot of investment opportunities from a medium to long term perspective in Indian equities, which is what we are currently focusing on. We currently hold some cash in our portfolios and will be looking to invest that into equities as the market becomes more attractive with every decline.”
Today’s sell off was due to global risk aversion. I think India is relatively better placed than other emerging economies,” said Soumendra Nath Lahiri, Head – Equity, L&T Mutual Fund.
Ritesh Jain, CIO, Tata Asset Management recommends investors to invest lump sum at such dips. “We feel that while the concerns are genuine, the fundamentals of Indian economy and markets are relatively better than other EMs. The current volatility has more to do with global risk aversion than with the health of our economy. Global markets are becoming increasingly integrated and risk is now spread easier than before. Having said that, we are better placed to weather a contagion with room for providing stimulus through rate cut, currency support through forex reserves and fiscal space opened by lower energy prices. Hence, we believe that investors should climb the wall of worry and use the resultant volatility to their advantage by using SIPs for regular investments and investing larger amounts at lower levels of markets.”
Anil Sarin, CIO, Edelweiss Global Asset Management says that investors should use this opportunity to enter markets, “It is due to global correction and India is very much a part of it. Between 2003 and 2007 we had many occasions when the Indian markets fell 10% but our markets recovered sharply from there. I don’t think it is a precursor to a bearish market. Our economic and political condition is far better as compared to other emerging economies. It’s a temporary hiccup and investors should use this opportunity to enter the markets.”
“I think one should not read too much into it. It was a panic sell off driven by global factors. As far as the rupee is concerned, I think it should settle in the range of Rs. 65-66 and Rs. 67 on the higher side. Once the dust settles, foreign investors are going to come back to India because our fundamentals are strong and our economy is also expected to grow at a faster pace as compared to other emerging markets,” said the fund manager of a foreign fund house.
Amit Nigam, Head – Equities, Peerless Funds Management says “We look at price corrections in individual stocks as an opportunity to buy a company, the business of which we like, at cheaper valuations. We believe that investors should use these corrections to allocate more money towards those companies which they were not able to buy (or buy enough) earlier due to high valuations”.
Let us know your views.
