money-making ideas: Volatility is high, but valuations are reasonable. What should you do?
Analysts said now is not the time to buy stocks all at once, every time, at what appears to be a low. It’s time to do some staggered buying over the next two weeks, they said.
“While Nifty50 stock is down 15% from its all-time high, many stocks have corrected 40-50%. As a result, valuations across the investable universe are much more reasonable today than they were. weren’t 6 months ago,” ASK said. Wealth advisors.
ASK said there is no rush to deploy undeployed funds because while India’s VIX is at high levels, it is not at record highs.
The best-case scenario, he said, would be a deal struck between warring parties Russia and Ukraine and the market rebound immediately.
“But it’s a gray swan, we’ll know when that happens. Until then, even if it’s tempting to catch the bottom, it’s best to spread the net slowly and widen it. A deployment over 2 to 6 weeks , probabilistically, has higher risk-adjusted returns than trying to roll out a large one-day chunk, markets make apparent near-term lows,” Ask said.
Nepean Capital’s Gautam Trivedi said he was sitting on a lot of money ahead of the U.S. rate hikes, but has rolled out money over the past two days. You can’t time the bottom, he noted.
“So yeah, we started nibbling, we actually started buying stocks that we think have reached our price levels,” he said.
He noted that 95 BSE500 stocks corrected 40% or more from their respective 52-week highs, 394 stocks corrected 20% or more from their respective highs, which indeed they did.
“That tells you that 80% of the stocks in the ESB 500 are in a bear market. So there’s a lot of choice and frankly anyone can just run a screen and you can find some amazing stocks that we thought were invincible and actually had major corrections,” he said.
On earnings, Emkay said earnings resilience could come from the Big-4 sectors that will benefit from the emerging scenario (namely oil, gas and metals) or see the least or negligible impact from the rise in crude oil and raw material prices. on their growth and profit margins (i.e. IT and banking.)
It is even then that Emkay sees the possibility of a decline of around 30% in PAT for autos, 20% for cement and 10% for consumer companies in the Nifty50.
“Clever downside looks limited: P/E and yield spread are below their respective 10-year averages; additional downside risk mainly due to increased risk premium – 25 bp higher cost of equity basis is down 6-7% from current levels,” he said. .