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As market suffers its worst day in 7 months, which stocks, spaces to bet on now?

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As the Dalal Street bulls endure the worst day in seven months, which sectors and stocks should you be betting on now? Here's what experts recommend.

As market suffers its worst day in 7 months, which stocks, spaces to bet on now?
Indian equity benchmarks suffered their worst single-day plunge since April on Monday amid a selloff across sectors. The Sensex tanked 1,170.1 points to end at 58,465.9 and the broader Nifty50 settled at 17,416.6, down 348.3 points from its previous close -- their worst single-day fall since April.
The market crash comes as many experts have warned of expensive valuations after the benchmarks broke a chain of records to unprecedented heights in a liquidity-driven run over the past few months.
A number of brokerages have flagged expensive valuations in the Indian market in the recent past. Last week, the RBI cautioned against valuations in domestic equities, which it said were much higher than what was expected based on financial indicators.
Is this the long impending correction that most analysts had anticipated?
Mahesh Nandurkar, Managing Director at Jefferies, told CNBC-TV18 the correction in the Indian market was due. He, however, added that the country is in for a period of strong economic data and solid corporate earnings growth.
Most analysts warn that further correction in the market cannot be ruled out for now, as the headline indices slide below important averages. But they are positive that the current phase will prepare the market for the next leg up.
The six percent correction from all-time highs is a healthy movement as the market needs to, time and again, balance out expensive valuations with bullish sentiments, Mohit Nigam, Head-PMS at Hem Securities, told CNBCTV18.com.
"Currently, the Nifty50 is around a price-to-earnings ratio of 24, a 12-month low. The fall in PE has been higher than index correction on back of expansion of earnings per share. Thus, it could be said that the market seems to be getting ready for a healthy up-move ahead," he said.
The only thing holding the market up was hope of a quick recovery in corporate earnings, according to Rahul Shah, Co-Head of Research at Equitymaster. "Any delay there or any bad news on that front and there could be more downside in the offing. If your time horizon is 10 years, you don't have to worry a great deal as the long-term India story is intact. But if it is 2-3 years, it may be a good idea to either partially or fully exit your most profitable investments,” he said.
Here's a list of stocks and sectors that analysts are betting on now:
Sectors
Jefferies' Nandurkar remains positive on real estate despite the sharp upmove in the space recently, along with mortgage lenders and select auto counters. Banks have underperformed owing to lack of foreign fund inflow, he said, expecting the banking space to make a comeback citing improvements in fundamentals.
AK Prabhakar, Head of Research at IDBI Capital, told CNBCTV18.com he is bullish on telecom and agrochemical spaces now. The correction in the market makes stocks that have not rallied yet and the ones that have corrected more attractive, he said.
Geojit Financial Services Chief Investment Strategist VK Vijayakumar recommends using the sharp downturn to buy IT shares. "IT is the clear leader of this rally. Investors can invest in gold ETFs to hedge risk," he said, adding that investors need not rush in to buy now, but, instead, wait for the dust to settle.
Hem Securities' Nigam is bullish on power, infrastructure, new-age and steel spaces.
Stocks
Prabhakar of IDBI Capital is bullish on Bayer Cropscience, Coromandel International and Dhanuka Agritech. He also likes Bharti Airtel and Reliance Industries shares. The 16,500 level in the Nifty50 will open up a window to buy quality stocks, such as Titan, Dmart and select FMCG names, he said.
Nigam suggests accumulating Tata Motors, JSW Steel, Prestige Estate and Bajaj Finance shares, his top picks for the near term.
Choice Broking AVP-Research Sachin Gupta recommends making use of every dip on Dalal Street now to make a fresh entry. He is positive on Bharti Airtel, Grasim, Dabur, Vedanta and Tech Mahindra.
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