Great time to buy stocks: Porinju Veliyath

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Pee Vee
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Great time to buy stocks: Porinju Veliyath

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Porinju Veliyath of Equity Intelligence India has advised that the market's correction is a bullish sign because investors are getting more attractive valuations.

He explained that there is nothing wrong with the Indian market technically and fundamentally.

Valuations are reasonable now

This is a fantastic opportunity for Indians to buy Indian equities. I am really happy about what is going on in the market.

Since the end of December, we were feeling some kind of discomfort at valuations, at the speed at which stocks had been going up, especially midcaps and smallcaps.

Some of the high quality stocks had been moving in such a way that many of them had gone up five, 10, 20 and 30 times in one to two years.

So there were some excesses.

In this correction - maybe it is a deep correction in a few days time -the midcaps and smallcaps, especially the ones which had gone up too much have corrected sharply. I feel happy and comfortable about this.

No reason for investors to panic

We have seen such corrections many times in the past, every time it was a different reason. It started with potential default by Greece.

It felt like it will affect everything in this country in a big way, and people were just selling. Then we had Brexit, the Trump win, we had the Fed rate hike fears and latest the Gujarat elections.

So people are looking for a reason to panic. If you want to panic, we will have many more reasons going forward in India.

The bottom line is the market is very comfortable. There were some excesses. They got fully corrected. Today is a beautiful day to buy stocks in the market.

In fact, the correction was over yesterday in many of the investible quality midcap and smallcap companies.

Porinju recommends ITC & Inox Lesirures to buy

You could see a lot of them in the positive yesterday, even while the Nifty was down. I just found ITC and something like Inox Leisure are today much better than the pre-Budget day.

Avoid HCL, Infosys

It is a very selective market. Stocks like HCL, Infosys are all flat. True, it is hurting to the trading community and short-term traders. But I am very comfortable.

Tremendous household savings will come into the stock market

I see tremendous amount of household savings flowing into equities in the next one year and more. So this correction is very healthy.

No chance of a Bear market

Whenever this kind of a panic happened, after every fall, people have a tendency to talk much further down, Porinju Veliyath said.

It has been happening every time when the market has corrected. So learn lessons from those falls.

Are we structurally getting into a bear market is the question? I am absolutely ruling it out. There is no chance.

And if we go structurally into a bear market, your money in the bank is not safe. The banks will default on your FDs. So that is the kind of situation our country is going through. We cannot afford to go slow. We cannot afford to de-grow.

The economic growth envisaged going forward is going to help investors create huge wealth in the coming years and there is absolutely no need to panic. It is totally unwarranted, in my opinion.

Just a temporary blip in an otherwise intact bull market

The bull market will continue for another 5-10, maybe 15-20 years, Porinju Veliyath said.

India's bull market, which is related to economic growth, is going to sustain. That is the big picture about India. When the bear market comes, people forget about the potential of the Indian economy, which can move from $2.5 trillion to three, four and five trillion.

Forget Warren Buffett quotes

Whenever people lose money in a short period, they start quoting Warren Buffet. They will talk all the theories learned in MBA. But that is not how the market functions.

Be rational

You have to be rational. Market's coming down is bullish, because you are getting more attractive valuations. It is not the other way around. India is structurally changing into a positive mode as an economy, and investment culture.

Tip of iceberg

We have both the aspects of equity investing today right; one is the technical aspect of the potential fund flow into the market; it has just started from our domestic households, we have just seen the tip of an iceberg in last one year. We saw some extra money coming from our households into equities for the first time. This is going to be much more intensified, I am very confident about that.

8% GDP growth is expected

On the fundamental side, we are going to grow at an average of 8 per cent in the next six or eight quarters. We have set the stage for much faster economic progress.

The recent reforms and all those government actions will start bearing fruit. Some of the corporate earnings, some pockets of the economy were underperforming over the past few quarters.

Now the stage is set for faster growth

Please do not forget, when the Nifty goes down 6-7 per cent, people forget all the positives, they start discussing about the negatives. Some of the negatives in the US have no relevance to Indian equity investors, Porinju Veliyath said.
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