Speaking about specific sectors, he said that a lot of good quality businesses are trading at very attractive levels.
The foreign institutional investors (FIIs) are facing redemptions, so they are selling. They are adjusting their portfolios and are selling what can be sold, said Ridham Desai, head of India equity research & India equity strategist at Morgan Stanley.
High quality stocks are falling and are getting hit the most because they are the ones that can be sold the most, he added.
"Domestic investors have put a lot of cash to work; a month ago they had a fairly high cash balance and even though the February flows were strong I suspect a lot of that cash is now into the market. What they are looking at is whether they need to make changes in their allocations to reflect the pricing and the fundamental environment," he said in an interview with CNBC-TV18.
"We are now at levels where if somebody wants to engage in stocks with a 12-month view, the outcome will be good. Yes, there could be more downside in the next month or two months but if I look out 12 months, it will be good," added Desai.
According to him, it is difficult to call the bottom in our markets but must start deploying cash.
When asked about global demand and supply shock, Desai said: "Nobody knows how bad this coronavirus spread can get. We have not yet figured how to cure this. What is happening right now is just a prevention. It’s coming a little late in several parts of the world and China showed the way several days ago that you have to aggressively quarantine people and stop the spread."
On the Yes Bank front, he mentioned that the action on Yes Bank is a welcome step and policy makers have done a good job.
"I think the financing for NBFCs, which had frozen and available only for the top rates NBFCs, will open up a bit and they will get much better liquidity conditions. This would have happened in ordinary circumstance but spreading of the virus has masked the positive actions around Yes Bank and the financial system," he further added.
Speaking about specific sectors, he said that a lot of good quality businesses are trading at very attractive levels.
"I am certainly avoiding global exposures right now. The virus brings greater global growth risk than domestic growth risk. So it’s possible that India’s own growth rate outperforms the world and therefore, global materials or IT are businesses that could be avoided for now until the dust settles especially on the Western hemisphere," Desai added.
Source: CNBC-TV18Time to show-off your poker skills and win Rs.25 lakhs with no investment. Register Now!
