Time to start buying again as fear looms in Equity markets.

There are two things in favour of the argument: an expected measure of decoupling with the developed economies in terms of capital market, which signifies fear does not last very long, there is space for bargain hunting taking for granted a bull market rally to continue after a break in India. Second aspect is the growth and other fundamentals of India which support the bulls. A major factor that is causing concern is the inflation hurting the buoyancy of the Indian consumers. Inflation is going to come in the way of the bull rally apart from disappointments in the earnings / specific to banking sector the shadow of NPAs and restructured debts. A strategy to use bargain opportunities with a time horizon beyond 12 months on stocks not so much impacted by interest rate movements (deleveraged balance sheets) and earnings and growth visibility to withstand rupee volatility (IT stocks) may be necessary. Infra story may take time to pick up, as heavy weights like L&T indicate. There may be room for adding a few defensive stocks as well (ITC may score over others). Obama is isolating the financial services sector for reform as part of an overall strategy to make US competitive and at the same time making financial services sector a recipient of tax payers' funds, behave within boundaries. I expect this will lead to new initiatives by hedge funds and PE players - we may find new structures evolve and that may help global capital flows re-organized towards best risk reward propositions. That will only further boost the prospects for capital markets in emerging economies.