How SVB collapse offers opportunity for bottom fishing in India — explained
After outbreak of Silicon Valley Bank (SVB) crisis, equity market across world came under the sell off heat. However, the SVB crisis taking shape of bank crisis in US as few more banks like Signature Bank, First Republic Bank, etc. have come under crisis. In fact, leading European bank and second largest Swiss bank Credit Suisse also come under crisis, which provided feed to global banking crisis. This bank crisis in US and Europe led to sharp selling in Indian stock market as BSE Sensex shed 2.18 per cent in the week gone by whereas NSE Nifty lost 2.29 per cent in last week. Nifty Bank index tumbled 2.42 per cent in this time.
According to stock market experts, this slide in quality stocks can be a good opportunity for long term positional investors who believe in bottom fishing. They said that recent fall in Indian stocks is very much sentimental and it has nothing to do with fundamentals. Experts advised bottom fishing and recommended quality auto, power and banking stocks to buy as Indian banks are in sound financial condition under the regulation of Reserve Bank of India (RBI).
Speaking on opportunities in Indian stock market after SVB collapse news, Girish Sodani, Head of Equity Market at Swastika Investmart said, “We believe that the impact of the banking collapse would be limited in India as well as will not have any effect on the Indian banks as the Indian banking system is more insulated & regulated under the supervision of RBI, primarily affecting tech start-ups and IT firms.”
“During this correction, we seem like an opportunity for the positional investor as we seen the two sectors like Auto sector and power stocks hold with strong fundamentals as well as work on many domestic factors with massive capex in last budgets. These sectors sustain positive recovered from such corrections previously. During these selloff, positional investor can keep eye on these two sectors and start accumulate from lower levels along with focus for mid to long term horizon,” said Swastika Investmart expert.
On financials of Indian banks, Avinash Gorakshkar, Head of Research at Profitmart said, “Indian banks are in sound financial condition as most of the Indian banks have reported improvement in their margins and due to high interest rate regime, they have got more money in hand for lending. As the RBI has been dropping dovish hint on interest rate hike in upcoming monetary policy meeting (MPC meeting), trend reversal on Dalal Street is quite likely. However, there can be more decline in global markets including Dalal Street, if the US Fed decided to increase interest rate in FOMC meeting next week.”
Stocks to buy
“We expect that a fundamental stocks gives strong bounce back include NTPC and Ashok Leyland for the upside of 30-40% from the current levels,” said Girish Sodani of Swastika Investmart.
Advising long term investors to look at auto and banking stocks, Avinash Gorakshkar of Profitmart Securities said, “Long term investors can buy Mahindra & Mahindra shares in auto segment whereas in banking sector, one can look at State Bank of India (SBI) and Canara Bank shares.”
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