Monday, 27 October 2008

Valuations attractive, buy now: Experts

The Sensex broke another psychological mark of 8,000 today while the Nifty slipped below the 2,300 level as well on weak global cues and intense unwinding by foreign institutional investors. Asian markets are also trading deep in the red. The market is expecting some Policy action from the government to calm investor sentiment, but has not been forthcoming.

The Sensex lost 971 points and is trading at 7,729. The Nifty fell 320 points to 2,264 at 1:15 pm. The Sensex has fallen 62% in 198 days. It has fallen 40% in Ocober, or from 13,203 to below 8,000.

Nitin Raheja, CIO, Rada Advisors, said valuations look attractive at this point.

He said the huge sell-off could be attributed to the crisis of confidence. “Resurrecting confidence in the market will require an all round effort from all participants in the market, whether it is the investors, regulatory authorities, and corporates for that confidence to come back before equities can again become an asset class where one wants to actively invest.”

Raheja feels the index levels may go down lower in November. However, he sees some sort of support coming in and some value buying and stimulus emerging into the market in the next one month. “Valuations today are very clearly justifying buying in the market. You have this whole liquidity paradigm where one sees reverse liquidity flows. You are not really seeing any kind of buying support happening at the domestic end.” He expects a sharp reverse rally.

Raheja believes corporate results have not been as bad as the stock prices make it out to be and said that the markets were falling not due to results or fundamentals but due to lack of liquidity and reverse liquidity.

Source: MoneyControl

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DISCLAIMER: The author is not a registered stockbroker nor a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity, index or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. The author recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and that you confirm the facts on your own before making important investment commitments.