Analysts Call Tracker February 2023

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Analysts’ Call Tracker - Feb 2023

Interest-rate worries are back on the table again. They were just easing, with the Fed dropping rate hikes to 50 bps in December and then to 25 bps this February, when data from the US labour market made everyone sit up again. Jobless claims and rising wages showed a resilient labour market. In India too there was a similar pattern. Rate hikes had dropped from 50 bps-levels to 35 bps in December. Yet, before the February Monetary Policy Committee (MPC) meeting, the Reserve Bank of India Governor, Shaktikanta Das raised concerns about “sticky and elevate” core inflation. After the meet, policy rates were hiked by 25 bps. The next meet will be held between April 3 and 6, and the market is tracking it closely. How closely is evident from the rally across markets after a recent comment from the Atlanta Federal Reserve Raphael Bostic said that he won’t back a more aggressive rate hike (50 bps) and is “firmly in the quarter-point move camp”.

There is a second, related concern that the domestic markets are trying to price in—that of El Nino. The weather phenomenon has been linked to rainfall deficit and drought. It can lead to food inflation and even the Finance Ministry’s monthly economic review has pointed this out. It can bring down agricultural output and weigh on rural demand, which has already been under pressure and has been making only a sluggish recovery.

The rout in Adani Group stocks was sensational but the markets had recovered from its impact in around two weeks. The recent rate-hike and inflation worries pulled the indices even lower and has been weighing on them for longer.

The best view is the Street view, we say, and a good way to capture it is through our very own Analyst Call Tracker. It tells you which sectors analysts are warming up to and which they are beginning to avoid, where they are taking bets against the market trend. We bring you the tracker for Nifty Stocks for the month of February 2023, sourced from Bloomberg. We started this series last June 2022.

The charts below give you a bird’s eye view, and links therein should give you the full story.

Read footnotes for a lowdown on how to read the charts

An incriminating report by a short-seller, withdrawal of a massive follow-on public offering, followed by Rs 10-lakh-crore market capitalisation wipeout—none of this has been able shake analysts’ confidence in Adani Ports and Special Economic Zone. It has 21 buy calls and zero sell or hold calls, indicating 100 percent optimism on Moneycontrol’s Analyst Call Tracker for February.

Bajaj Finserv, Adani Ports and SEZ, and Titan got the maximum upgrades by brokerages in February, while Maruti Suzuki received the highest number of buy ratings at 39, up from 37 last month.

The domestic equity market took a beating in February as investors shunned risky asset classes on fears that the US Federal Reserve would lift interest rates higher than anticipated and for a longer period as it fights to rein in sticky inflation.

How to read the charts:

Optimism is based on the percentage share of ‘Buy’ recommendations in total analyst recommendations filed with Bloomberg; pessimism is the share of ‘Sell’ and ‘Hold’ recommendations. Upgrades are an increase in the percentage share of ‘Buy’ in the total recommendations compared to what was a month ago; downgrades represent an increase in ‘Sell’ and ‘Hold’ out of the total recommendations. Contrarian Upgrades represent shares which have seen maximum increase in ‘Buy’ recommendations though their stock prices have fallen most (or risen least) during a given period. Contrarian Downgrades list shares that have seen an increase in 'Hold' or 'Sell' recommendations though their prices have risen most (or fallen least) during the given period. Reports are based on recommendations as of Aug 31, 2022. Source: Bloomberg.