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Last Updated : Sep 24, 2020 09:58 AM IST | Source: Moneycontrol.com

Betting on momentum? These 56 BSE500 stocks hit fresh record highs in a falling market

The 56 stocks which hit fresh record highs in September include prominent names like RIL, Infosys, TCS, HCL Tech, Asian Paints, Dr Reddy’s Laboratories, L&T Infotech, and Jubilant FoodWorks etc.


Weak global cues, geopolitical concerns as well as rising COVID-19 cases has weighed on the equity markets recently and India is no exception.

The S&P BSE Sensex quickly lost more than 1000 points while the Nifty50 broke below crucial support levels placed at 11,600-11,500, and is now trading near the support zone of 11,000.

Both Sensex and Nifty gave up gains and turned negative for the month in September, falling over 2 percent.

Close

Benchmark indices might be dancing to the tune of global cues but there are over 50 stocks in the S&P BSE 500 index which have hit their fresh all-time high in volatile markets and over 80 stocks that hit a fresh 52-week high in September.

The 56 stocks which hit fresh record highs in September include prominent names like RIL, Infosys, TCS, HCL Tech, Asian Paints, Dr Reddy’s Laboratories, L&T Infotech, and Jubilant FoodWorks etc.

Pharma, IT, metals as well as consumption names dominated the list. All these sectors are likely to benefit the most from the pandemic.

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What should investors do?

The next big question is should investors stick to momentum stocks or the stocks that are showing robust buying or hunt value?

“A lot of traders/investors follow this system of investing in stocks that touched 52-week highs. This is because they are betting on a company where the insiders or regular investors are bullish due to a reason which may or may not be known publicly,” Deepak Jasani, Head of Retail Research, HDFC Securities told Moneycontrol.

“One has to be careful in not latching on to penny stocks or stocks with dubious business models or promoters. Buying a stock that has hit 52 weeks low is like catching a falling knife. One does not know as to how much more the stock can fall,” he said.

Of the 56 stocks, about 40 are from the small & midcap space (filtered based on market cap). But, still, experts advise caution.

“While mid and smallcap indices are trading at better multiples compared to the long-term mean but they are also not cheap by any means. One should stick to quality midcaps and smallcaps to generate outperformance and absolute returns,” Neeraj Chadawar, Head - Quantitative Equity Research, Axis Securities told Moneycontrol.

Also, investors should analyse factors which are driving the rally in the stock. Is it liquidity or core fundamentals such as order win, capex plans or improved earnings?

“Sticking with stocks that are showing momentum has to be seen in two perspectives. One the underlying fundamentals have to be extremely strong and consistent and secondly, the entry into such stocks should be determined with technical factors showing proper base formations,” Mayuresh Joshi, Head of Equity Research, William O'Neil India told Moneycontrol.

“If the combination if there for such stocks there is good reasoning for having calibrated entry into such stocks. As they keep on exhibiting strong data on both counts the ideation of adding positions as price moves higher or pyramiding can be followed,” he said.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Sep 24, 2020 09:58 am
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