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The Nifty and Sensex were largely flat over the last week. In the context of the economy, September CPI inflation in India reached a 5-month high of 7.41%, driven mostly by rising food prices, while August’s Index of Industrial Production (IIP) shrank by 0.8%. In the past week, despite the erratic global market driven by US bond yields, the dollar index, crude oil, and macroeconomic concerns, FPIs were net sellers while DIIs were net buyers. The market amid the global updates may closely react to the Q2 results of the cement and finance industry in the next week. Investing in the stock market during an inflationary time may result in significant short-term risk and negative returns if fundamentally strong value stocks are not considered picking. With a well-diversified portfolio, equity investors who are planning to invest in stocks in the coming festive season when the market is anticipated to stay volatile should give close consideration towards what the analysts say.
Which sector may drive an opportunity to relook at the market?
“Vivek Banka, Founding Team at GoalTeller said “This Deepawali from a stock market perspective is very different from last year. While last year there was absolute frenzy about US stocks, technology companies and the future prospects in general, this time things outwardly appear much more morbid with the Russia Ukraine war at the tipping point of escalating to bigger and wider proportions, Inflation rocking countries globally, China and Europe slowing down, abnormal tech valuations getting busted. These concerns have weighed on markets globally with India being a fair exception due to the large retail inflows that have cushioned the market fall.”
He also added that “We at GoalTeller believe that this is a great opportunity for investors who were fascinated by technology companies and stocks to relook at this sector because we feel that tech and digitisation are here to stay and in fact will gradually keep getting more pronounced. In fact over the next 12/24 months, this tech burst could be a boon for larger companies as they will get opportunities to buy out new-age companies cheaper and consolidate better.”
From a technical front of view, Vivek Banka said “The Nasdaq is down by > 30% this year while the Nifty IT index is just about at 30%, however, if we dive deeper the fall in some pockets have been much much deeper viz. Netflix down by > 60%, Robinhood by > 40% and so on and so forth. Some of these companies might never come back to their old valuations but we strongly believe that well-placed tech companies with reasonable valuations like Apple and Google ( Alphabet) will continue to be sought after, and ditto for Indian tech companies. Hence we do feel the following funds / sectors could be good bets for the next 1-3 years for aggressive investors viz.”
Stocks to buy this Diwali
Nehal Mota, Co-Founder, Finnovate said “For buying quality stocks this Diwali from an investment and momentum perspective, look at 3 themes. Firstly, look for India-specific consumption stories. Secondly, focus on global stocks only where there is value. Finally, there is still value in mid-caps.” Nehal Mota recommended buying these high-quality stocks which potential buyers can look at over this festive season by taking into account the aforementioned themes.
1. Consumption has been an Indian theme; less vulnerable to global headwinds. Considering the huge potential and proactive price cuts, investors can buy Tata Consumer Products (Rs756) and Hindustan Unilever (Rs2,567).
2. Another Indian theme with domestic execution bias is defence. With a focus on domestic sourcing of defence equipment, we pick Hindustan Aeronautics – HAL (Rs2,360) and Mazagon Docks (Rs625).
3. Alternate energy will see a strong revaluation. Our top picks are Tata Power (Rs216) and an EV-related digital engineering and design company, Tata Elxsi (Rs8,519).
4. If Nifty has to gain, BFSI has to outperform. We suggest buying SBI (Rs522), from a sum of parts valuation perspective and Bajaj Finserv (Rs1,682) where the holding company discount makes the pricing reasonable.
5. Finally two stocks in the global space that can outperform in the next one year with substantial value leeway. We suggest buying Infosys (Rs1,422) after impressive results, and Sun Pharma (Rs968) as the de-risked play on Pharma.
Dalal Street Last Week
Shrikant Chouhan, Head of equity research (Retail), Kotak Securities Ltd said “In the past week, the Nifty and Sensex were largely flat. Till Thursday, the markets were cautious ahead of the release of the US CPI print, however, gained on the last day of the week. Both BSE Midcap and SmallCap underperformed and corrected 1.9% and 0.98% respectively. In Sectoral, except for IT, Banks and Nifty Finance, the rest of the sectors were negative versus last week, with realty (-2.1%), oil, gas & consumable fuels (-1.15%), Power (-0.9%)and metals (-0.5%) being the major losers. Within the Nifty Index, Axis Bank (+6.5%), Coal India (+2.9%) and HCL Technologies (+4.1%) gained the most, while Wipro (-7.5%), Divi’s Laboratories (-4.3%) and SBI Life (-4.16%) lost the most. On the economy front, September CPI inflation for India rose to 7.41% (August: 7%), led by rising food prices, while August IIP contracted by 0.8%. FPIs were net sellers in the past five trading sessions, while DIIs were net buyers in the same period. Markets going ahead may be dominated by global news flows and Q2FY23 results.”
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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(This story has not been checked by Kashmir Bulletin and is auto-generated from other sources)
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