The Hunt for Value ; the Market Is Hogging the Limelight These Days and the Incessantly Falling Sensex Is Creating Excellent Buying Opportunities for Investors Despite the Gut-Wrenching Uncertainty.

Summary

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Cricket and the stock market are hogging the headlines these days, the former for its highs and the latter for its lows. And both hold the promise of greater exhilaration for the average Indian. So, while the Indian cricket team looks like recording its biggest ever Test series win against the Aussies, the incessantly falling stock market is creating excellent buying opportunities for investors despite the gut-wrenching uncertainty.

Indeed, the carnage on Dalal Street has been unprecedented. Large- cap stocks have lost 57 per cent, mid-caps 69 per cent and small caps 73 per cent from their peak levels in January. Investors who took the plunge in the stock markets either directly or through mutual funds two years ago feel cheated as stock values are down to their two year-lows. The wealth created over the last two years has gone up in smoke. People are running for cover and taking shelter in other asset classes such as gold and fixed deposits. Nobody knows when all this will end.

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The Hunt for Value ; the Market Is Hogging the Limelight These Days and the Incessantly Falling Sensex Is Creating Excellent Buying Opportunities for Investors Despite the Gut-Wrenching Uncertainty.

But ironically, it's the severity of the fall that has made stocks that much more alluring. They are nearly as cheap now as they were five years ago when markets were just entering the longest bull- run in the India stock market history. The price to book value the basic valuation parameter that is obtained by dividing the book value of a company by its stock price of the largecap stocks that make up the Sensex and the Nifty, has now fallen to its May 2003 levels. The mid-cap stocks and the Top-100...

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