Fidelity looks for contra buying in India as heavy share market selling offers quality stocks on discount sale

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Fidelity International is waiting to pounce on and grab the opportunity to buy shares in China and India as indiscriminate selling of high quality names is making way for attractive valuations. "We have seen from China to India that high quality names have been sold down indiscriminately and valuations are looking attractive," said Medha Samant, Director of Investment, Fidelity International in an interview with Bloomberg TV. Indian stock markets have seen even the big-wigs fall 20-30 per cent since the beginning of the year as coronavirus infected markets across the globe and FIIs withdrew as much as 1.12 Lakh crore in March alone.

"There has been indiscriminate selling across China and India. Now, it is about being selective and not only focusing on high growth areas for the future but perhaps, also the time to be contrarian, trying to see value and which companies could emerge from here," Samant added. However, she said it is important to keep an eye on how the number of coronavirus cases across various geographies move going forward. Giving advice on how to tread forward, Smant highlighted that it was crucial to keep an eye out on the balance sheet of companies to understand who all have cash and how much foreign exchange exposure is on the books.

Stocks across the board in India have taken a beating. The first public-listed company in India to reach the Rs 10 lakh crore mark in terms of market capitalisation has tanked 32 per cent since the beginning of the year, India's largest private-sector lender HDFC Bank has seen its share price dive 32.5 per cent and ITC, the FMCG giant is down 31 per cent since January 1.

Samant added, "In India, which has traditionally been a very high P/E market, valuations have been sold down. It’s really about high quality names and we are seeing opportunities." Samant, however, remained cautious about the coronavirus and whether its impact has maxed out or not. Samant added that markets across the world are expecting terrible macro numbers from growth to unemployment as the epicenter of the coronavirus shifts from China to the United States. She said that markets are in uncharted territory but what remains to be seen is how well the various stimulus packages are received across the globe.