Stock Market Crash: Don’t jump to buy, let the dust settle and let it play out, Rahul Arora’s advice to investors

Sailing through the carnage witnessed in the stock market on June 4, Rahul Arora, the Chief Executive Officer of Nirmal Bang Institutional Equities, advised investors against bottom fishing in today’s trade.

“Wait, don’t jump into buying today. There will be opportunities, but for today, let the dust settle, let it play out,” Arora advised investors in an interaction with Moneycontrol.

Arora acknowledged that the BJP-led NDA’s struggle to cross the 300-mark, a tally much lower than what exit polls predicted, came as a setback for the market. However, he also attributed the intense profit booking seen in trade to exuberant valuations in several pockets across the market.

“Much of the PSU re-rating in the past year is attributed to the government’s focus on indigenization and PLI schemes. However, except for PSU banks, the balance sheets of other PSUs lack the strength to justify their valuations,” Arora noted.

Meanwhile, he anticipates market focus to shift towards defensive sectors like FMCG and pharma in the short term, particularly after the election did not align with market expectations.

Once the dust settles, Arora recommends compiling a portfolio comprising FMCG, pharma, and some information technology stocks over a three-month period.

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“Even within the three, I think it’d be better to be heavy on FMCG and pharma. FMCG was one of the best-performing sectors in the latest earnings season, combined with projections of a normal monsoon, rural recovery picking pace, and easing inflation,” Arora highlighted.

(This is a developing story. Please come back for more.)

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