"Buy the DAX within the next one or two months and keep it and you will do tremendously well because Germany is highly geared to the global economy where I'm very positive. So there's no canary in the coalmine long term."
Macroeconomic picture 'peaked'
German stocks have been hit after a slew of economic data over the past two days pointed towards a weaker economy. German factory orders fell 3.2 percent month-on-month in June—the largest decline since September 2011 while industrial output rose a mere 0.3 percent, below the 1.3 percent forecast by economists.
Geopolitical tensions are also overhanging the European economy, with Russia retaliating on Thursday with sanctions of its own. Prime Minister Dmitry Medvedev said European food imports had been banned. Over the longer term, the DAX has been particularly hard-hit by developments in Russia, as it is dominated by companies that are dependent on Russian energy.
Read MoreGermany stumbles but not 'canary in the coal mine'
Coupled with a deteriorating euro zone macroeconomic picture, in which Italy slid into its third recession since 2008, analysts said Germany equities will not see a big upside.
"The macroeconomic picture peaked in the first quarter of this year for the euro zone and you have these awful numbers from Italy. The factory numbers out of Germany show that growth is softening," Mike Ingram, market strategist at BCG Partners, told CNBC in a phone interview.
All eyes are on the European Central Bank (ECB) as it holds a monetary policy meeting on Thursday. While the market thinks the ECB will hold fire on any sort of policy action, analysts have not ruled out some form of quantitative easing (QE) in the future which could boost liquidity in the currency bloc with the hope of spurring bank lending to the economy.