In two trading sessions after the announcement of the corporate tax rate cuts, the Nifty rallied almost 8.20 per cent. It has now given-up almost half those gains and is up only 4 per cent. Many analysts had forecast that the cut in corporate tax rates would push the Nifty earnings a good 6-7 per cent higher.

Market valuations after the present fall are not very expensive. With the drop of almost 4 per cent in the indices in the last fortnight or so, the valuations could be around 18 times one year forward earnings on the Nifty, which is more or less in line with past averages.

Broader markets are undervalued

The broader markets though are highly undervalued. Stocks like Coal India, Hindustan Zinc can give you dividend yields of nearly 7 to 9 per cent, if you buy them at their current levels. Bluechip stocks have either hit 52 week lows, or very close to that.

Classic examples include names like Tata Steel, LIC Housing Finance, PNB Housing Finance, JSW Steel, Coal India, L&T Finance Holdings all of which have tremendous value.

Even consumer names like Bajaj Consumer, which makes the noted Bajaj Almond hair Oil has fallen to 52 week lows. Even the pharma space, has seen a sheer collapse in their share prices. Aurobindo Pharma is clearly at multi-year lows and so is Glenmark Pharma. However, we are not suggesting that you buy pharma stocks, given that many of them are having issues over US US FDA compliance. Media too has not been spared with Zee Entertainment at multi-year lows and so are stocks like Jagran Prakashan.

Metal, pharma, consumer goods, NBFCs, select PSU banks, autos have all fallen to 52-week lows or close to there. Except select private sector banking names and IT, most of the sectors are deep in the red. Some like Yes Bank have hit a decade low.

There is no doubt that there are plenty of opportunities to buy into good quality stocks. Focus on the stocks that have an uninterrupted dividend paying track record. These are the companies that would most certainly even have decent cash flows.

Difficult to time the market

In the last few months, markets and stocks have been all over the pace. It is extremely difficult to time the market. The only way is to buy stocks now would be through the Systematic Investment route, where your buying is more staggered rather than a lumpsum. Foreign Portfolio Investors continue to sell Indian stocks and there is no indication that they are going to stop selling anytime soon.

Mutual Funds on the other hand have been net buyers in the markets for several months now. The hopes rest on these set of investors to take the markets higher. So far, small mutual fund investors have shown great maturity and continue to stick to mutual funds through the SIP route. The worries are if the returns continue to remain poor over a prolonged period of time, these investors might get easily frustrated, as returns over the last three years in most cases have been even below bank deposit interest rates.

To sum up, there is no doubt value in select stocks that have been mentioned above. The only concern is whether investors have the courage to enter, given the hige carnage in the broader markets.