There has been a capitulation of the market and I am not sure whether this is a factor, but I think psychologically investors are giving up, says Ajay Srivastava, CEO, Dimensions Corporate. Excerpts from an interview with ETNOW.We are attributing the downfall to a number of factors, but what do you think is spooking the markets the most?It is a simple equation of when a demand slowdown of this magnitude takes place and still there are negative policy disruptions like the EV policy, then obviously hope is lost, firstly because of the demand slowdown. Second is an active policy framework to address it. When the market finds that instead of a positive framework, it is negative, then you give up hope. What basically is happening now is people are giving up hope. So far we were trading with hope of lots of things going to happen and so on. But we have reached a point where people are just giving up. It is a capitulation of the market and I am not sure whether this is a factor, but I think psychologically investors are giving up. Each company we talk to, seems clueless about when and how this economic recovery is going to play out. Do you think it is going to be pretty much the state of the market as well? Is the pain going to be longer lasting and are we not going to stop sub-11K mark for the Nifty?Actually that is why I said that in the policy framework we see today, we do not understand that instead of a supportive policy, it is all negative. Look at the NHB guidelines of the subvention schemes that came out of the blue in a real estate market which is crying for attention. I do not blame the industrialists. They do not know what is happening. But I can tell you one thing. Investors know what is happening and they are voting with their demat statements. They are voting with their sells right now. They are voting with the short. Investors are very clear. Even industrialists are not that clear because perhaps they want to be polite and cannot be negative about their companies too much. But the fact remains that we are looking for a much-much bigger slowdown and impact that will ultimately come on to the banks. The bank lending and recovering will very soon become a problem area. If you cannot sell, how do you pay the loan? As simple as that. There needs to be a very strong policy between RBI and the government. And everybody has to come out and stop negative policy formation — NHB, EV, etc. It just has to stop before you can get some confidence back in the system. Having said that, let me go to the other side of the argument. Lots of very good companies are now going very cheap. If you are not an investor, if you have never been in the market, if you have not seen mayhem in your equity accounts, I think you have got to be ready with a cheque book to buy some very good stocks that are now available in the market. I think you are reaching a point where if you are not over invested in the market, you could be on the buying side in a matter of days.The list is so selective. Just day before you had ICICI Bank which impressed the street, but the twin Axis that everyone was betting on has actually disappointed with higher provisioning and slippages.At some point you have got to relate the value and the price of the shares to what intrinsically is going to be the worst case scenario for these companies. You are right, they may face pain over a certain period of time. But at the end of the day if you are looking at a longer-term horizon, they will bounce back. The good part is that the reason they will come in is not because they are doing well. The good part is that they will come in because the smaller banks will be left far behind. If you are an investor and if you have got any small bank in your portfolio, except unless backed by somebody serious, I would say you need to get out of it and get into the larger banks. If you have got the problems today with the smaller portfolio, get out. There is a lot of good quality stuff available in the market. Even in this market there are pockets you can buy. I will just give you an example, I am not giving you a recommendation to buy or sell. If you see Ion Exchange for instance, that is a quality stock in a quality industry. It is seeing so much trade now that you can get an opportunity to get into that at 610 if you want to sell at 680, or you get in at 680 wait it out and so on. Go case by case. It is going to be mayhem, but you will find pockets if you look at the multiplex guys. They have corrected substantially. Eventually there will be equilibrium in terms of share price and profitability. So plan your portfolio. These are the times when you really plan your portfolios and buy what you like most. Having said that nothing great will happen in the next three months, but also start planning your portfolio to buy some of these stocks because steep correction gives you chance to get back what you never thought would be possible just about a month back.If investors are taking out their cheque books, where can they find opportunity even within the broader end of the market?See, it is very simple. You have to go for the large size and for the market leaders. If you go industry to industry, you will find that there are not more than one or two stocks that are the market leaders and are now becoming relatively cheaper. Obviously you will not go for Bajaj twins in terms of the finance because they are really very expensive stocks. You would tend to go for the other ones at some point of time. HDFC, HDFC Bank will stabilise and you would want to go back to those kind of stocks. Look at multiplex, as we discussed. If you look at the aviation stocks, you know every industry has one or two leaders, focus your mind there. Let us say people who missed out on buying Asian Paints, it has a stellar record for the last 20 years. If I am not wrong, it consistently rewards shareholders. You might want to start looking at each market leader.