Foreign Investor – Buying in February
After rupee depreciated FII has huge setback in return on investment. So many FII has started liquidating the stocks based on valuation and future performance. Last year 2018 FII sold worth of Rs 80,919 (net = equity + debt) securities from Indian Market. The selling of equities continues in Jan 2019 (Rs -5556) as well but we can see slight pick up in Feb 2019 FII as they bought Rs 5085.
As the global economy is recovering and we can see FII started investing on blue chip and undervalued stocks. We can show how irrelevant the market is trading in mid cap when compared to large index.
NIFTY has provided 2.76% from 2018 till Feb 2019 but Nifty Midcap 50 has tanked -19.66% from 2018 till Feb 2019. So the market behaviour is irrational with large index. Definitely the same will be normalized over the period of time as many midcap stocks are trading at single digit PE or below book value. We can show some stocks are trading below book value but it may pick up future provided if the assets are reasonably valued right.
DHFL – Rs 123.2 Where as book value at Rs 272.2
Prabhat Dairy – Rs 56.52 Where as book value at Rs 74.75
Infibeam – Rs 3945 where as book value at Rs 39.77
Above stocks are more stressed due to many reasons but trading book value is a sign of cheap but if the business is not intact definitely it will ruin your investment again. If the news are rumours, definitely it will bounce back quickly.