Rs 31,09,459 crore m-cap loss! Correction the start of a stock picker’s market
BJP has erased almost all the gains made by the Nifty this year in just one day. The Nifty fell by 1,379 points or 5.93% on Tuesday, but it still trades at an expensive valuation compared to global markets, with 21.27 times its one-year forward earnings, second only to Japan.
Both India and Japan have experienced sharp rallies, driven by rapid economic growth in India and corporate reforms in Japan. Currently, the Chinese market is trading at 11 times its one-year forward earnings, while Singapore, Korea, Hong
Kong, and Brazil are trading below China. Overseas investors have sold shares worth `50,000 crore in India so far this year, with the majority moving to cheaper markets like China.
According to Aditya Khemka, fund manager at InCred Asset Management, Tuesday’s market correction suggests that it is the beginning of a stock picker’s market and probably a prolonged pause for the passive investor. “We expect the market to be sideways in the near future and businesses with strong earnings momentum and reasonable valuations to outperform the market.”
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