Markets have over reacted the S&P downgrade of USA today and have become over sold. I think that the downgrade was factored in when we saw a huge fall on Thursday and Friday in global and Indian markets. Today when markets have taken another sharp fall, I feel this is a good time to start investing into the markets again. If you remember sometime ago I had advised to take wait and watch approach and maintaining cash on the sidelines. Now Im advising to start using some of that cash to begin buying into the markets. The best strategy you can use is dividing the cash you want to invest into two halves and invest one half now and keep the other half again on the sidelines in case you get better levels to invest in future. It is always important keep some money on the sidelines for future buying as markets are very unpredictable and always gives an opportunity to make a fortune so to best use that opportunity we need to keep some cash on sidelines in a falling market.

My top sector pick in this market would be private banking space and I feel one must have an exposure to this sector as that sector is most likely to give you most returns in times to come. On other hand if you’re looking for the safest stock in this market, then go for oil and gas pick – Petronet LNG. I would suggest to avoid any kind of stock that is trading at abnormal valuations because when markets tend to crack, the high valued stocks are the first ones to see selling pressures.

This slowdown in the global economy is bound to help India in the long term and thus the growth story of India stays intact. I feel markets are very close to bottoming out. Our markets have come to 14 kind of PE multiple and I don’t see it falling much more from current levels. Although some feel that Nifty might go down to 4800, and thus keeping that picture in mind, we are going to invest only half the cash on the sidelines. If markets do fall to 4800 on the nifty, we will still have some cash on the sidelines to buy on dip. So we investors are good if market recovers or it falls. Recovery will lead to profit making and fall will lead to further buying on dips from a long term view.

Related posts:

1. Time To Start Buying Stocks?
2. My Views On The Market
3. Adopt Wait and Watch Approach Now
4. Market Is Testing Your Patience
5. Positive on Banks