We are not witnessing just a correction but we are in a bear market which may end in a few months, said Samir Arora, Founder, Helios Capital, in an interview with ET Now.
"This is a bear market, not a correction. The bear market has happened in many stocks. It would be best if we could say that it is a bear market which will get over in a few months because bear markets normally do not fall 50%. It was only in 2008 that they fell 50-60%. So a bear market is where one can see 25-30% correction and in some sense, in India also, many stocks have fallen 25-30% or more," Arora told ET Now.
Arora said that the duration of the real fall is only seven-eight months. Even in 2000, it started in March-April of 2000 and then nearly played out by December. In 2008, it started in January 2008 but ended in March 2009.
Arora added that the market seems to have factored in most negatives which is the normal thing.
"I am a bull and I am 90% invested. The thing is that in the long run, wars also do not matter. If you look at the World Wars, the Iraq war and others and look at it on a chart right now, the war does not matter," he said.
Arora is cautious about the domestic market taking cues from the US market.
"If one looks at the previous big falls in the US and maybe the rest of the world, it normally ends with either the Federal Reserve coming in a big way or government coming in or somebody coming in to support in some sense. All that is not only missing but they are on the other side right now and the valuations have to become much cheaper. The US market has not settled down and I do not think the Indian market can settle down either," said Arora.
Many brokerage firms and market experts have been trimming their growth forecast for the Indian market in light of higher inflation, rate hikes and tepid economic growth.
BofA Securities has cut its Nifty target to 16,000 from 17,000 earlier, on the back of Interest rate hikes in the US; inflation worries; and a recent off-cycle rate hike by the RBI.
The brokerage house also said in a negative scenario, the Nifty's valuation multiple can shrink to 15.8x (LTA) with its target at 13,700 points, implying a 15 per cent downside from current levels.
Disclaimer: This article is based on an ET Now interview and a BofA Securities report which is available on public platforms. The views and recommendations made above are those of the individual analyst and the broking firm and not of MintGenie.