Our outlook on markets for short to medium term is somewhat cautious, but medium to long term is reasonably bullish. India's fundamental story is intact and growth trajectory of corporate earnings can be felt in an upward movement.
Retail investors have to take cautious stand and keep reasonable portion of cash, which can be deployed in case of deep correction. We will be carefully watching 9,700-9,800 levels on Nifty. Sustained break below these levels might take Nifty 10-15 per cent lower. However, we still feel that there is a possibility of Nifty going higher. On upside, if it breaks the 11,000 levels on sustained basis, we may be looking at the end of the correction phase and leading equities to resume the bull phase.
While investing, one actually should not look at the index but at the stocks, which one wants to invest in because at the end of the day it is the individual company's fundamentals and performance that will determine the long-term price movement.
Look at the companies, which are relatively undervalued with near term tailwinds but with a potential of traversing through the troubled waters. A few pharma companies have poorly performed in the last 12-18 months, but are showing signs of recovery.
We also see good opportunities emerging into large cap IT stocks, rural themed auto companies and small to mid-sized banking stocks. On the contrary side, we also see turnaround in some Public Sector Undertaking banks. If held for long term, these stocks can add sizable return to the portfolio.
The key to success in investing remains on what you buy,why you buy and when you buy.