R Jagannathan
It is always a good time to buy stocks. The only question is which ones. In a bull market, almost everything one touches turns to gold. Now, you have to be picky. While the probability is that the market will trend down for some more time, this is not the time to buy the market, but good stocks. It is precisely when the market is down that even blue chips will be available at reasonable rates. A two-year hold will yield great returns – as we saw in 2001 and 2008. Prashant Jain of HDFC Mutual Fund argues that there is little chance of going wrong while buying equities at a Sensex forward price-earnings (P/E) multiple of between 10 and 13. “Good returns materialise over time on investments made at cheap valuations (meaning low P/Es). The market is yet to factor in benefits to the Indian economy from a downtrend in crude oil prices, he adds. Actually, India will benefit from a global slowdown not only from falling oil and commodity prices, but from the possibility of further stimulus packages. Assuming there will be one euro rescue in 2012 and a further US Fed stimulus (QE3?) later in the year (no US president would like to campaign in a tanking economy), the resultant increase in liquidity will give us at least a short-term bounce. When every dollar gets you Rs 55-56 there is no reason for FIIs to sit on their hands indefinitely. read less read more
Venky Vembu
Investment wisdom says that one should be greedy when others are fearful. Today, there's plenty of fear floating around, but it takes a brave investor to summon up greed in this market - simply because there's an avalanche of bad news still to come, both at home and overseas. At home, as we've argued elsewhere on Firstpost, the economic growth number is going to get worse before it gets better. But since inflation hasn't been vanquished, the RBI cannot lower rates - although it will come under intense political pressure to do so. And we haven't even begun to see the feeblest efforts by the government to address structural problems in the macroeconomy. The global picture doesn't induce any optimism either, given that the eurozone crisis is a gaping wound, with the very real prospect of a mess unravelling of the currency union. Nobody has the foggiest idea of how that will play out, but this much is for sure: just the fear factor will mean that I can then buy the Indian market at a substantial discount to today's valuations. For today, though, fear is the prevailing emotion for me. read less read more
