A veteran investor described the current capitulation in share prices as one of the worst phases in his investing career. The problem right now is that investors are not even finding value at abysmally low levels in stocks. They are willing to sell at any and every price. This was not the case earlier, where investors held onto stocks, if the companies were reputable and there were hopes of a revival.
Take the case of a stock like Coal India. It has hit a lifetime low and offers a dividend yield of 7 per cent. There just seems to be no bottom for the stock and similar is the case with so many stocks like Yes Bank, IndiaBulls Housing, Karnataka Bank, L&T Finance Holdings, Tata Motors, RBL Bank, Eris Lifesciences etc. All of these stocks are near 52-week lows, if not lifetime lows.
Each time you thought the stock was attractive to buy, it only fell further.
To be honest nobody knows where the bottom for so many good quality stocks is.
Should you buy into these stocks?
It really depends whether something has changed fundamentally for the company. For example, in the case of Coal India, the fall has come on account of the fact that the government has allowed FDI in the mining sector. Now, this is not going to impact Coal India to such an extent, as it already has mines allocated. The company continues to give you a decent dividend of 7 per cent.
In the case of Yes Bank, the worries are pretty serious, which is why the stock has been dumped from 52-week highs of Rs 386 to the current price of Rs 56. Stocks like IndiaBulls Housing will continue to yield a handsome dividend yield of 7 per cent at these levels. A stock like Karnataka Bank too offers a dividend yield of 5 per cent and we have not seen the bank skip dividends in the last so many years. Some stocks are really worth buying, at the current market price. All one needs is money and a little courage.