The unwinding of the yen carry trade and US sub-prime mortgage woes have plagued global markets for sometime now. One of the victims of that global sell-off has been telecom and the steel stocks as foreign investors have pared their investments in India.

Steel stocks have been also out of favour as demand for metals has fallen globally. Also, China, which was the major importer of metals, has considerably pared down imports. In the last one month, the BSE Metal index was down 19.36%. In comparison, the Sensex was down only 10.13%. Steel major Tata Steel has fallen 21% while JSW Steel has plummeted 25% in the one-month period. However, state-owned Steel Authority of India has fallen just 10% in the period under review.

Telecom companies are plagued by low spectrum availability and increasing government pressure to pare down costs. The reduction of players in each circle has further put pressure on the growth plans of telecom companies. Stocks like Reliance Communications, Bharti Airtel, and Idea Cellular are down 16%, 9%, and 15% respectively in the period under review.

So, should investors buy or stay away from these sectors?

On steel stocks, Ashith Kampani, MD, JM Financial Consultants, said, "The steel sector is getting a little bit more consolidated with overseas acquisitions, which we have seen from Tata Steel to JSW Steel and a few more. A number of large steel companies from Korea are planning to set up plants here. Also, L N Mittal has a bigger plan to do that. India needs all that steel because the infrastructure is one of the main stay here. In the medium- to long-term steel stocks should do well, but in this global correction all are getting affected and infected. One should look at any corrections to add on to the good names."

Nandan Chakraborty, Head of Research, Enam, feels that metals will continue to remain volatile on account of international reasons.

"Metals are going to be volatile because of international reasons. There is the first stage that is flight to safety and then the second stage is to figure out the fundamentals and so on. Metals will be volatile and most metals are actually quite cheap right now," he added.

Kampani feels that telecom is a great space to be in. "The Indian telecom story continues to grow. Idea, R-Comm, and Bharti Airtel will continue to grow. We have seen the sell-off mainly because the FIIs holding are very large in all these names. So, all these corrections are a good time to get in," he added.

Chakraborty advises investors to wait a bit before investing in telecom stocks. "I would say have adequate cash to buy telecom companies, as they keep cracking, because these are not related to politics in the longer-term," he added.