(Bloomberg) -- Even as traders in India fret over how much more pain the nation’s uncontrolled coronavirus surge will inflict on local stocks, some seasoned investors are getting ready to dip their toes back into the market.Concerns that a fresh round of lockdown-like rules triggered by the new virus wave will derail India’s nascent economic recovery have made the benchmark S&P BSE Sensex Asia’s worst performer in April, bringing it on the verge of technical correction this week. Weakening sentiment has also seen foreign funds turn net sellers of local shares after a six-month buying spree.While there’s no denying that the outbreak and its financial and humanitarian implications remain the key focus for market watchers, some long-term investors from Fidelity International and Invesco are already seeking opportunities to add stocks. Progress in India’s vaccination campaign and relatively less-disruptive lockdown measures are seen offering some support to Asia’s third-largest economy and its equity market.“We think that the resurgence of Covid-19 is short-term concern. We do not expect large-scale lockdowns as policymakers take a more localized approach to controlling the resurgence,” said Sukumar Rajah, director of portfolio management at Franklin Templeton Emerging Markets Equity. “We continue to be positive in the Indian equity markets and continue to identify bottom-up opportunities based on our criteria of quality, sustainability and growth,”A few other money managers are echoing similar views as the market’s recent pullback has brought valuations down from the record highs seen earlier in the year. The Sensex is down about 8% from an all-time high in February -- a 10% slide would mark a technical correction.“A couple of months ago, we did have a view that market is pricing in too many positives, since then we have seen earnings upgrades and valuation has corrected,” said Jitendra Gohil, head of India equity research at Credit Suisse Wealth Management. “We are positive on the market and are recommending investors to buy on this weakness. Our house view is that the recovery will be very sharp in the second half.”This new wave of virus cases may delay India’s recovery, but it is unlikely to derail it, according to Fitch Ratings, which affirmed India’s sovereign debt rating at BBB-, the lowest investment grade score.The Sensex is little changed so far in 2021 after having climbed in each of the previous five years. The gauge has surged 85% from its low in March 2020 -- when global equity markets took the biggest hit from the pandemic -- beating a 71% jump in the MSCI Asia Pacific Index of regional equities.“We will be selective and cautious in the short term, but any correction in the market will provide a buying opportunity,” said Amit Goel, a portfolio manager at Fidelity International.” “We continue to be optimistic on the economy and equities over the medium to long term, driven by structural drivers of growth such as strong demographics, under-penetration of consumer goods and services, increasing urbanisation, and growth in the educated workforce.”Taking ProfitSome are more cautious than others as India reported 314,835 new infections on Thursday, the world’s biggest one-day jump in coronavirus cases ever. The country’s health system has been pushed to breaking point, with hospitals reporting shortages of everything from intensive care beds to medical oxygen.Bodies piling up at crematoriums and burial grounds across the nation are sparking concerns that the death toll from a ferocious new Covid-19 wave may be much higher than official records.Concerns about the virus are also showing in India’s currency and debt markets. The rupee is Asia’s worst-performing currency in April and its slide is worsening a slump in Indian corporate dollar bonds that are now among the region’s worst performers.Aberdeen Standard Investments says that while the surge in infections could trigger stricter lockdowns if the situation worsens, which will have a knock-on impact on the re-opening of the economy and recovery prospects.“We have been nimble in terms of taking some profit off the table or topping up our positions where we see opportunity to do so,” said Kristy Fong, senior investment director for Asian equities at Aberdeen Standard.She also added however that in the longer term, several trends favor India: the presence of many of Asia’s most successful companies that have been tried and tested by prior crises and a growing middle class that is increasingly affluent.For many funds, their optimism is also stemming from expectations of a strong recovery in corporate earnings. Analysts have boosted their 12-month forward profit estimates for Sensex members by around 14% so far this year, about double the rise seen for MSCI Asia Pacific constituents, according to data compiled by Bloomberg.“We continue to see good earnings growth potential from both near and longer-term perspectives that will be supportive of a strong Indian equity market,” said Rajah of Franklin Templeton.READ: BofA Expects Near-Term Nifty Correction, Gains By Year EndShekhar Shekhar Sambhshivan, an investment director at Invesco, takes comfort from the fact that factories have been running at “decent” capacity during the current wave of infections.His team, meanwhile, has turned to defensive stocks to wade through near-term volatility. It reduced exposure to consumer discretionary stocks in the past month as it sees family spending getting affected, but raised holdings of pharmaceutical and information technology shares.(Updates prices throughout. Adds mention of rupee and corporate bonds in the 12th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.