How to strike it rich in a gloomy stock market

Over the past few months, emerging markets have been witnessing a good amount of fund outflow to the US and Europe, and experts say that a reversal is on the cards

When the markets are down, it's time to buy, so goes the 'sell high and buy low' investment truism. "Given that we have fallen 10%, you will have a rebound ..." Ashwani Gujral, Fund Manager, Ashwanigujral.com tells ET Now.

Over the past few months, emerging markets have been witnessing a good amount of fund outflow to the US and Europe, and experts say that a reversal is on the cards. "We have seen a flow of money going into emerging market funds during the last five-six years in pretty large amounts ... That trend will get reversed," Mark Mobius, emerging markets fund manager at Franklin Templeton Investments, told ET Now inan interview on Thursday.

Adding to sentiment is the fact that almost 50% of the stocks traded on the Indian stock market are below 2008 levels.

Here's the lowdown on how to play the market from here:

STOCKS THAT CAN GIVE RICH RETURNS

Jet Airways: It seems a matter of days when Etihad and Jet Airways BSE 0.59 %  will seal a deal under which the Abu Dhabi-based airline will pick a 24% stake in the Naresh Goyal-led carrier.

Last month, the Foreign Investment Promotion Board approved the deal, and now it needs to get a go-ahead of market regulator Sebi and fair trade watchdog CCI.

The deal is very likely to see strong movement in the airline's stock price.

Ranbaxy: The stock rose 34% in intraday trade on Thursday, finally ending the day 27.49% higher at Rs 359.40, from Wednesday's closing price of Rs 281.90. The reasons were many, starting from Malaysia giving its joint venture with Malaysian shareholders - Ranbaxy Malaysia Sdn Bhd (RMSB) - site for setting up a greenfield manufacturing facility in Malaysia; and strong operating performance and sales reported by the company in Q1, especially in the US, showing some sort of uptick in the base business.

But that's not all for this particular stock. Experts are very bullish on the pharma sector. "The interesting thing in pharma companies is that this is probably one of the few sectors where even if the companies do not work and the promoter sells out, as an investor you will still end up making money."

Financial Technologies: The stock has corrected very much, thanks to the NSEL crisis. But now that the clouds have very much cleared, the stock looks like a good buy. "One should let the dust settle and then take a reasonable long-term call on Financial Technologies," Avinnash Gorakssakar, Head of Research, Miintdirect.com, told ET Now.

RATE-SENSITIVE STOCKS

The Reserve Bank, in its latest policy review, held key policy rates, making it amply clear that its key priority is to support the rupee at the expense of spurring economic growth, a bad news for rate-sensitive stocks.

While cutting its rating on Indian stocks to 'underweight', investment bank Goldman Sachs in its latest report advises investors to avoid rate-sensitive sectors given cyclical pressure from rising rates and slower growth.

Analyst: Vinit Pagaria, Senior Vice President - Investment Strategies at Microsec Capital:

DLF (BUY - CMP: 162.50: SL: 160 Tgt1: 165 Tgt2: 168)

DLF has corrected sharply and is standing close to its support level of Rs 161. With RBI not changing repo rate and CRR, a pull back might take the stock higher up to Rs 165 followed by Rs 168.

Yes Bank BSE -3.45 %  (BUY - CMP: 366.50 SL: 362 Tgt1: 371 Tgt2: 378)

Yes Bank has corrected sharply in the last couple of weeks. The momentum indicators are deeply oversold and a pull back rally can take the stock higher in the extreme short term.

Axis Bank BSE 1.60 %  (BUY - CMP: 1109 SL: 1088 Tgt1: 1124 Tgt2: 1138

Axis Bank has also corrected significantly in the last few trading sessions and a short covering rally might take the stock higher up to Rs 1140 odd level in the short term.