With more than 12 percent corrections just behind us, this is time to start investing in lump sum and there are possibilities of good inflows at these levels, Aashish P Somaiyaa, CEO at WhiteOak Capital Asset Management said in an interview with Moneycontrol.
"Investors usually do not redeem or sell when investments are underwater, redemptions tend to happen when there is a recovery and capital is restored above par value after a significant fall. But yes, inflows - not SIP inflows but discretionary inflows, can slow down. This is actually a time to start investing lump sum into the markets and one hopes for good inflows at these levels, but it would be foolhardy to assume that market sentiment would not impact investor mood," Somaiyaa argued.
He further told Moneycontrol that he wouldn't be surprised if sustained negativity in the markets starts to take a toll on retail investors' confidence.
"To make money, one needs to be counter-cyclical but exaggerated moves in the markets evoke an emotional reaction in investors, that’s natural. Humans are not logical, they are psychological as is written by Rory Sutherland in his book, Alchemy: The Surprising Power of Ideas That Don't Make Sense," he said.
Somaiyaa further noted that around 5-10 percent correction from any level can never be ruled out and that is possible even now. However, what matters is that the current reaction in the market seems to be a result of seriously bad news emanating from beyond our borders, he added.
"It started with China tech meltdown due to political interference in that space, followed by a US tech meltdown and further reaction to tapering in the US. This was followed by the war and rising oil, metal and commodity prices, and global fear of inflation. In anticipation, yields have globally started to harden, the dollar has appreciated and currencies have depreciated. This is a significant adjustment in global markets. But domestic economic conditions, and India's external macro and corporate performance seem to be strong. We are just seeing the beginning of a new economic cycle as also manufacturing and export resurgence in India," explained the market expert.
Keeping past experiences of global meltdown and related FPI selling and our local conditions in mind, one can say the market is now getting into an attractive zone and opportunities are there for investors to enter and make good returns over the next 12-24 months, he suggested investors.
Among sectors, he believes the most attractive is private sector banks given that credit offtake is improving, NPA (non-performing assets) cycle has turned and corporate balance sheets are also healthy.
However, he added that WhiteOak is not a sectoral or top-down investor and given the sharpness of the recent fall in the last 30 days one can say there are pockets of value emerging across the spectrum.