Market to maintain status quo until push from global cues

Some awaiting further dip in indices; short-term bets on select stocks.

After dubbing the vote on account as “disappointing”, the market tumbled last week. The global markets also did not provide any positive signal. This week, the local equity market is unlikely to spring a positive surprise unless the global markets bounce back significantly.
Amid evaporating “feel-good” factor, a pall of gloom envelops the mindset of the investors.
Sensing the chances of testing the bottom in key indices, strategists have suggested general shorting for day traders. Having revised the revenue and earning growth downwards for the current quarter, some of the market players are waiting for a further dip in the indices to chalk out a short- to medium-term strategy.
Exercises are on to identify the likely out-performers during the present quarter. For some, higher dividend yield at lower market prices is an attractive proposition for entries. However, the long-term players are now conspicuous by their absence.
Indications are that the long-term strategies may be unrolled after some time when more confirmation of lowest valuation levels will be available.

Circumspect

In this bear market, fund managers and individual investors have been learning to circumspect about declared numbers, if not downright sceptical. Discounts to growth estimates are being reviewed accordingly. Expansion plans, acquisitions and mergers are hardly generating confidence.
On the contrary, the diminutions of assets acquired in recent past and leveraging on account of capacity expansion are being treated as severely negative.
As valuation on the equity street is largely a function of sentiment, negative excesses are quite in order.
When restatement of accounts (for several years in the past) becomes a reality for once blue-chip or mid-sized companies, investors’ tendency turns not to see them in isolation. Market is currently not in a frame of mind to spare yesterday’s street gods.
Even in this depressing situation, market seems to have arrived at a consensus of sorts on certain stocks on which bets might be placed in the short term. The three public sector oil marketing companies top the list. The current lower global crude oil prices are expected to give them better margins and opportunity for better dividends.
Select telecom, power and power equipment, cement, pharmaceutical and FMCG stocks, which have potential to outperform others relative to the current valuations, are also being looked at with interest but, of course, with varying degrees. But this relative metrics are likely to be used for short-term perspective only. None appear to have the heart for long-term commitment now.
An investment advisory service provider for a large number of foreign investors has identified just 15 stocks that are likely to outperform the BSE 500 Index. The advisory outfit said they are unlikely to revisit the broader index components before June.