Still it is not time to buy, say analysts
Tuesday's choppy trading session saw close to 75 stocks touching their all-time low on the Bombay Stock Exchange. However, market experts say that this may still not be a good time to enter the market as stocks are expected to fall further.
An all-time low on the BSE indicates the lowest a stock touched since its listing.. However, stocks which hit a 52-week low may not necessarily have hit an all-time low. It must also be noted that many of the stocks which hit their all-time low may have recently listed on the exchange.
Market sentiments have been negative for a while following uncertain global markets, policy slowdown on the domestic front, lower growth expectation and a depreciating rupee. “Honestly, it is not surprising that these stocks have hit an all-time low. We may see more scrips touching their all-time lows,” said Mr Mehraboon Jamshed Irani, Principal & Head-PCG, Nirmal Bang.
He added that going forward the market may bottom-out, but the next 1-2 quarters still look worrisome.
While from the point of view of stock prices, valuations may look attractive, analysts warn that merely looking at stock prices may not be a sound strategy for investment. “Investors should not try to time the market. If the P/E ratio of some stocks moves up, but the overall P/E ratio of the market is shrinking, then it may not necessarily be a good time to buy those stocks,” said Mr Vineet Arora, Executive Vice-President, ICICI Securities.
Mr Irani concurs: “People need to look out for companies with good fundamentals, good promoters and good cash reserves with no heavy borrowing, among other things. They must ensure the company is not heavily leveraged and buy into such companies. Unfortunately, there are very few such companies in the market today. So, investors would do well to be cautious in their investments.”
While the Sensex have been swinging heavily over the past few days, it was particularly volatile on Tuesday with the benchmark index falling by as much as 100 points and rising by around 200 points during the day. The Sensex ended the day at 16002. 51 points, up by around 132 points (0.8 per cent).
Ten stocks have hit their life-time highs.
The Consumer Durables sector fell the most on the BSE (-2.01 per cent), followed by Capital Goods sector which fell by 0.77 per cent. The BSE Metal sector was the best performer and rose by two per cent.