Is market slump a buying opportunity

Valuations are getting extremely cheap and it is now becoming a great buying oppotunity for long term investors. Investors can easily buy-in at below 7500 level.

Investors can consider buying frontline stocks at corrective levels. My prefered sector includes cement & public sector banks.

 

[Dhruv Bindhani]

Valuations are getting extremely cheap and it is now becoming a great buying oppotunity for long term investors. Investors can easily buy-in at below 7500 level.

Investors can consider buying frontline stocks at corrective levels. My prefered sector includes cement & public sector banks.

The article from January 20, 2016, expresses a bullish sentiment for the Indian stock market, specifically recommending it as a "great buying opportunity for long term investors" due to "extremely cheap" valuations. The author suggests buying frontline stocks when the Nifty (implied, given the 7500 level) is below 7500.

Key Recommendations and Context from the Article:

• Market Entry Point: Investors are advised to consider buying when the market (likely referring to the Nifty 50, which was around 7963 at the start of Jan 2016 and dipped to 7309 by Jan 20, 2016) is "below 7500 level." This suggests the market was in a corrective phase at the time.
• Preferred Sectors: The author specifically prefers the cement sector and public sector banks.

Market Context Around January 2016 (based on searches):

• Overall Market Sentiment: January 2016 was a volatile month for the Indian stock market. The Nifty 50 started around 7960 but saw a significant downturn, falling by about 10% by January 20th and further in February. Concerns about the Chinese slowdown, global cues, and weak corporate earnings contributed to this bearish sentiment. This aligns with the article's perspective of valuations being "extremely cheap" and a "corrective level" for buying.
• Cement Sector Outlook (January 2016): At that time, the Indian cement sector was seen as attractive due to easing cost pressures (FY16) and improving utilization rates expected in FY17. Government thrust on infrastructure and road projects was anticipated to boost cement demand, making it a favorable sector.
• Public Sector Banks (PSBs) Outlook (January 2016): Public Sector Banks were facing significant challenges, particularly with rising Non-Performing Assets (NPAs). The Asset Quality Review (AQR) initiated by the RBI in 2015 was leading to substantial losses for PSBs as they recognized bad loans and increased provisions. Despite government capital injections, PSBs were prioritizing asset quality over aggressive growth. While the long-term outlook for the banking sector (especially private banks) would improve post-cleanup, PSBs were in a difficult phase.

In summary, the article in January 2016 advocated for long-term buying in the Indian market, particularly in cement and public sector banks, seeing the prevailing low valuations as an opportunity amidst a corrective market phase. The external context confirms that the market was indeed in a downturn, and the recommended sectors had mixed outlooks at the time, with cement looking more positive and PSBs grappling with asset quality issues.