Global equity markets are witnessing a hope rally possibly after many European economies and China announced measures to help the markets and the economy, said Udayan Mukherjee, adding that India is also likely to follow the suit.

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“It is conceivable that after a brutal selloff, you have a kind of relief rally. I do not know how long-lived it will be or how durable it will be, but it is conceivable that we will get one, maybe a couple of 100 points on the Nifty once the package comes in,” said Mukherjee.

Mukherjee said he is not sure that a possible relief package from the government would resolve the economic situation easily. He said it may only pave the way for that long-overdue relief rally, with which most bear markets are characterized.

"So traders can play it but investors need to see a lot more before we can conclude that a bottom is in place,” he added.

“Right now the market should focus on the extent and nature of these bailout or stimulus packages that all countries are contemplating or rappelling with,” added Mukherjee.

Commenting on the slowdown and its impact on the earnings, Mukherjee said markets have priced in much of this but it does not mean that "we still may not have to wade through another 4-5 months of very ordinary numbers.”

“However, the worst of the price damage might be over but I do not know whether that’s true of the rest of the market. We are discussing a bear market here locally and globally, recession-like conditions abroad and many stocks in India where people are hiding are still trading at 50 plus PE multiples. So there are many moving parts, things can still go down from here but in some midcaps and clusters like auto, much of the price damage, if not most, has been done already,” he further added.

On the investment front, Mukherjee said, “In a time of crisis like this, look at the past. Don’t look at the future; the future we have no clue about especially at a time like this but if we look at the past, look at the past 10 year track record – from the time of 1997 to the 2 major local and global crisis of late 90s and 2008-09.”

“Look at the companies which have actually tided over this crisis with minimum drawdown, you will find the same list of companies, very little variation in those names; the same Nestle, Marico, Asian Paints, HDFC Bank and its boring but it’s great in time of such uncertainty like this and I would say add a corporate bank here and insurance company there - that’s fine but stick to the bluest of bluechips and look at the past, don’t look at the future,” he added.

First Published:Aug 19, 2019 11:32 AM IST