Nifty is down about 30 percent from its recent record high of 12,430 hit on January 20, and about 90 percent of the companies hit their 52-week low in March.
As many as 45 companies out of Nifty50 have hit their multi-year low amid the mayhem caused by the outbreak of COVID-19 virus across the globe. Foreign institutional investors (FIIs) have alone pulled out more than Rs 60,000 cr from the cash segment of the Indian equity market in March alone.
Stocks that have hit their fresh 52-week low in March include prominent names like Shree Cement, Eicher Motors, Bajaj Finserv, Maruti Suzuki, UltraTech Cements, Bajaj Finance, TCS, and Hero MotoCorp, according to data collated on March 27.
Most of the companies which are part of the index are bluechip names and are leaders of their respective sectors. With the recent fall seen in the markets, many of the blue-chip names are trading at multi-year lows.
The question now is – are these stocks good long-term buys? Moneycontrol spoke to experts on this and they said, not all stocks which have hit their 52-week lows are long term buys, but only a select few.
Some of the stocks which are going through a turmoil are due to structural or industry-specific issues, hence, it does make sense to avoid while some of them are under pressure due to institutional selling.
It makes a valid case for investors who are looking at an investment horizon of 2-3 years. Because the volatility is likely to continue amid the Coronavirus outbreak at least till the time a medically approved vaccine comes to light.
“Investor, looking to build long term portfolio, can start investing in blue chips companies such as Reliance Industries, HDFC twins, Bajaj finance, Asian paints, Colgate, Britannia, Dabur, L&T, Axis Bank, Titan, Cipla, Infosys and TCS which are available at a reasonable valuation,” Ajit Mishra, VP Research, Religare Broking told Moneycontrol.
“Though we do not rule out further downside in the stock price due to on-going virus concern and its impact on the economy, we would advise buying these fundamentally sound stocks in a phased manner for healthy returns over the next 2-3 years,” he said.
Experts do advise caution on the part of investors before making a buy or a sell decision. Positions in quality stocks can be made in a staggered manner keeping in view the risk profile of investor(s) in order to avoid opportunity loss, suggest experts.
“Markets are in grip of risk aversion due to the spread of coronavirus pandemic. Though the stocks have corrected significantly from their highs, the uncertainty involved in the markets has not abated given the escalation of new cases and causalities due to the virus esp. in the US and Europe,” Pankaj Bobade, Fundamental Research head, Axis Securities Limited told Moneycontrol.
“If one has more than 3 years of investment horizon, one can look at investing in the corrected blue chips in staggered manner thereby averaging the cost of acquisition,” he said.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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