Here's why now could be great buying opportunity from long-term horizon, says Ashmore’s Ashwini Agarwal

“The other risk that has happened concomitantly is what has happened to oil prices and what has happened to the interest rates in the US and therefore, the other knock-on effects. So that is multiplying the problem that the Western economies are facing and that is the concern for the markets in addition to what the virus is doing at this point in time,” said Agarwal in an interaction with CNBC-TV18.

“So far as Indian stock markets are concerned and Indian investors are concerned, we are domestic economy largely, lower energy prices and lower material prices help the economy. We are very well positioned to do more business with the rest of the world after what has happened in China,” Agarwal further added.

According to him, India needs to use manufacturing opportunity that China has thrown up due to coronavirus hit.

Speaking from a long-term investor’s perspective, he said, “You have to look at where there has been maximum amount of dislocation in stock price relative to fundamentals. So let’s take the private sector banks, which have got sold off in the wake of the developments at Yes Bank and many of them have enough capital to grow, many of them do not have the kind of NPL problems or the scale of the NPL problems that plagued Yes Bank, but these stocks also got sold off because there is a genuine fear that depositors are worried about keeping their money at these banks and my sense is that this fear will dissipate over a period of time.”

“The other area that I would look to nibble into are areas which essentially have domestic demand as key driver; where you are not dependent upon external trade in a significant way because virus as well as developments on the economies in the Western world will put pressure on businesses that are dependent on international trade or exports in a big way,” Agarwal added.

“I do not think demand conditions for IT services will be significantly impacted, but to what extent travel restrictions can impact project rollouts or short-term revenue outlook, one really does not know. Also the tailwind that we have seen in the INR over the last few weeks, I do not see a fundamental justification behind it. Therefore, IT traditionally is a defensive, solid balance sheets, great companies, I do not think there is a problem in end demand but short-term travel restrictions and the USD INR handle might be issues to worry about,” he further added.