Long-term investors should hoard stocks, says RBS

Even though the market has seen some rebound today, experts fear it is likely to slip further. In an exclusive interview with CNBC-TV 18, Devesh Kumar, head of equities, RBS India, said another 5 to 10 percent downside is possible as institutional flows are not likely to improve anytime soon. He, however, is bullish on banking stocks and feels that the next 25-45 days is the right time to acquire banks.

But Devesh said that another mild downside is not a major concern as the markets are likely to bounce back by New Year.

Institutional flows: People are preferring to be fence sitters

Devesh said that September has been one of the worst months for institutional flows and October is likely to be the same. " Fear of a bear market is keeping people away", he said.

Even though people feel that India is a good place to park funds in, they are in no hurry to do so. Looking at valuations, stocks are looking very cheap and attractive and if an investor is thinking long-term now is a good time to accumulate. But, Devesh, warns that if investors don’t want to see purchases slide in value they must play a wait and watch game for now.

New Year may see some positive action in the market

Devesh feels the year will not witness a game-changing scenario but November could see some buying as stocks will be available at reasonable rates.Moreover, if the market sees a five to seven percent correction flows are likely to come in. “People would like to see more signs of India showing a different behaviour from other countries and handling of its own problems,” said Divesh.

Earnings season: Lack of volume interest in the market for the next quarter

Devesh said as far as earnings are concerned the next quarter will be tricky due to high interest rates and decline in demand for some industries. Once all negatives have been fully factored in and couple of positive signs comes, people may start pumping in more money into the market. “But right now I think that this result season is going to be tricky and we are looking at 8-10 percent growth.”

Market valuation: Won’t see further downside unless complete panic sets in

Devesh is bullish on a strong bounce unless there is more volatility in the US and Europe. He added that the new year will be a turnaround period for the market and January and February will see pick up in volumes.

Watch video: It’s not over yet! RBS says market may fall another 5-10%