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What to do in this turbulent market as biggies take a big beating — use this time wisely, say experts

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What to do in this turbulent market as biggies take a big beating — use this time wisely, say experts


As the Nifty50 lurks in one of the slowest bear markets, with biggies — such as financial, IT, and oil & gas shares — being punished, should one look at smaller spaces on the Street?

What to do in this turbulent market as biggies take a big beating — use this time wisely, say experts
Seven months and counting. Indian equity benchmarks have come within a kissing distance of revisiting their all-time highs and then retreated. The more recent of the U-turns have been more violent thanks to fears about aggressive rate hikes and the prospect of receding global growth. Life on Dalal Street has pretty much been rangebound ever since — big or small.
As the Nifty50 lurks in one of the slowest bear markets, many of its key movers are already deep into the red.
For instance, the index has receded more than 13 percent from its peak (as of May 24). In the last one month alone, it has lost more than six percent of its value, with IT, financial and oil & gas being the biggest drags.
IndexChange vs 52-week high (%)Change in one month (%)
Nifty Midcap 100-17-9.1
Nifty Smallcap 100-25.7-15.1
Nifty Bank-18-4.9
Nifty Financial Services-20.1-5.1
Nifty IT-27.7-12
Nifty Oil & Gas-8.4-7.3
Nifty FMCG-9.50.6
Nifty Auto-8.40.8
The 50-strong blue-chip index has come within one percent of its lifetime high on multiple occasions so far this year.
As index biggies continue to take big blows, should you adjust their weightage in your portfolio?
No, say analysts, but you can certainly use these turbulent times to relook at your basket.
January-March corporate earnings have shown that several sectors face margin pressure, despite some even taking price hikes, but more is needed to maintain margins, Yash Gupta-Equity Research Analyst at Angel One, told CNBCTV18.com.
He suggests long-term investors stick to their asset allocation and have a diversified portfolio during the current volatile phase.
To VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, services appears to be a good space to be. It is a hedge against inflation as services won't be impacted by input price increases like manufacturing, he said.
Financial and IT services account for the lion's share of services on Dalal Street.
"The distinct trend in the market is the shift from growth to value. This trend is likely to sustain in the short run. From the value perspective, financials are good buys for the medium to long term," he said.
However, margin pressure is likely to persist for the space.
For some of these companies, margins have corrected from all-time highs, but it is a sector one cannot judge as a homogeneous one, Viraj Mehta, Managing Director of PMS at Equirus, told CNBC-TV18.
"It is a very heterogeneous sector where the economics of one segment are different from those of another segment," he said.
Dipan Mehta, Director at Elixir Equities, told CNBC-TV18 commodities as a space have regulatory and market action that is difficult to predict.
"I have never been a great fan of commodities... We can't just make out where the next googly comes from... This is typical of any commodity business," he said. 
But are there any opportunities within commodities? 
Vijayakumar finds metal stocks attractive after the recent correction.
StockOne-month return (%)
Nifty metal-19.6
JSW Steel-26.2
Tata Steel-18.1
"The export tax will be temporary," he told CNBCTV18.com.
Sudip Bandopadhyay, Group Chairman of Inditrade Capital, is bullish on steel companies.
He believes Indian infrastructure and realty construction require significant incremental steel production, which will keep Indian steel manufacturers buoyant.
Tata Steel remains his top pick for the long term.
This is a space with no big demand at the moment but that is something that may change going forward, according to Neeraj Deewan, Director at Quantum Securities. He is cautious on cement at the moment.
Given the current fuel and power prices, which are higher expenses for the sector, it is difficult for the companies to push the margins through, he told CNBC-TV18. "One has to wait for another quarter or so to see how the margins pan out," he said.
The near duopoly telecom segment is set for profitable growth, said Vijayakumar.
Not everyone believes in the sectoral churn story in the current market scenario.
One must be mindful of sectoral exposures while picking stocks and aim for healthy diversification, Richa Agarwal, Senior Research Analyst at Equitymaster, told CNBCTV18.com.
She believes that once that is in place, business-specific fundamentals and management quality should be the influencing criteria for long-term investors to pick stocks, along with a margin of safety in valuations.
"Any short-term correction could be a good opportunity to take exposure to fundamentally good companies irrespective of sectors. I believe that capex revival could be a strong theme to play over the next few years," she added.
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