Investors should gradually accumulate good stocks which are having a strong financial position, strong balance sheet and strong free cash flow generation.
Indian markets just wiped out about Rs 7 lakh cr in terms of market capitalisation on the BSE just a day ahead of ‘Holi’. The S&P BSE Sensex and Nifty50 witnessed their worst day in history in absolute terms.
The only color which D-Street is playing with is deep red, thanks to a fall in crude oil prices, rising cases of Coronavirus which is creating threatening to impact global growth, and a fall in US Treasury Yields.
The recent fall seen in equity markets has turned sentiment weak but at the same time, it has also made valuations slightly more attractive for long term investors. Hence, investors should ignore the noise and focus on picking quality stocks on declines.
“D-Street is clearly playing red Holi this year, you’ve likely heard that investing in stocks and bonds is a good way to diversify your portfolio. The most important point is tune out of market noises and don’t let your own fears or the fears of others cause you to act irrationally,” Dyaneshwar Padwal – AVP- Technical Analyst at KIFS Trade Capital, told Moneycontrol.
Investors should gradually accumulate good stocks which are having a strong financial position, a strong balance sheet and a strong free cash flow generation as these stocks are generally not impacted too much and are consistent performers, suggest experts.
Although it may be difficult to predict the bottom, any dips towards 10,000 will be an attractive level to buy into your stocks. “Long term shouldn’t be viewed as one year but at least for a good 10 years. While domestic retail investors don’t have that kind of patience and miss out accumulating an enormous amount of wealth,” Paras Bothra, President of Equity Research, Ashika Stock Broking, told Moneycontrol.
“Nevertheless, companies like Asian Paints, HDFC bank, Britannia, Nestle & Tata Consumers could be excellent compounders over long term, provided the panic in the markets give some good bargain buying opportunity in these names,” he said.
The recent fall in Indian markets is largely on account of external factors. Hence, once there is stability on the global front, Indian markets should be able to bottom out.
In order to safeguard the portfolio, one must opt for diversification. The current fall in Crude prices is going to benefit petroleum and paint companies in the country. So, these should be included in the portfolio along with Gold, suggest experts.
“Gold futures can also be included in the portfolio as there exists an inverse relation between equity and gold. Midcap pharma stocks should also be acquired and this will optimally diversify the portfolio and help to cruise through the turbulent waters of Nifty,” Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, told Moneycontrol.
We have collated a list of ten stocks from various experts which investors could buy this Holi with an investment horizon of 1 year:
Expert: Ajit Mishra VP Research, Religare Broking
L&T has a strong order book, high earnings visibility and healthy project pipeline. Further, improvement in its working capital is likely to lead to better returns. Besides it is currently trading at an attractive valuation, hence one can buy/Accumulate L&T.
We believe that the FMCG sector is currently facing a slowdown, however, a revival is expected in the medium to long term.
Further, management expects a revival in the economy. Thus, it continues to focus on strengthening its presence by increasing market share, expanding distribution reach in both rural and urban area, premiumizing and launching innovative products, steady capacity addition and improved product mix make Britannia one of the preferred picks in the FMCG sector.
Coromandel International is the second-largest phosphatic fertilizer player with a market share of ~20 percent and boasts of higher utilization levels.
A recovery in southwest monsoon, as well as an increase in crop sowing for Rabi season on the pan-India basis, augur well for the growth of agri and fertilizers companies. We believe Coromandel is well placed in the sector to capitalize on this opportunity.
Axis Bank can be bought or accumulated in the banking space as it has posted a decent set of numbers for Q3FY20. Further, its loan growth - as well as assets quality - has been improving. Therefore, it can prove to be a good long-term bet.
Expert: Dyaneshwar Padwal – AVP- Technical Analyst at KIFS Trade Capital
Jubilant Food Works Limited is one of India’s largest foodservice companies. The company holds the master franchise rights for two international brands, Domino’s Pizza and Dunkin' Donuts - addressing two different food market segments.
The company currently operates at more than 1,200 outlets for Domino’s Pizza, Dunkin Donuts and Hongs Kitchen and is a market leader in the pizza segment.
Technically, the stock has corrected approx 20 percent and is trading near the crucial support of a previous lifetime high of Rs 1,578 level which may act as a trend reversal point, the investors are suggested to buy on dips.
Technically, if we look at the stock on a higher time frame mainly on a weekly price chart the stock has given the intermediate trend line breakout where investors are advised to follow buy in dips strategy.
The first line of defense for bears is placed near the Rs 809 level with the proximity of 61.8 percent Fibonacci retracement while resistance is placed near the Rs 1,184 level if bulls manage to surpass these levels we will see the stock moving towards the uncharted northern territory.
If we take an outlook of the insurance industry its overall penetration to GDP is 3.69 percent where it is believed the Indian insurance industry is undervalued.
Over the years, it is constantly moving towards growth where its current market size is approx. Rs 7 lakh crore.
Among the private players, HDFC LIFE is the biggest player as it contributes 25.1 percent market share in the private sectors as it is also in lead among other listed insurance companies showing 86 percent gains from its issue price of Rs 290 on November 17, 2017.
Technically, the stock is trading near the support level of Rs 495 in the proximity of 50 percent Fibonacci retracement where every dip acts as a buying opportunity.
Brokerage Firm: HDFC Securities
Favorable structural changes at ICICI Bank (better asset quality and corporate underwriting, balance sheet retailisation and P&L fortification) underpin our constructive stance on the bank.
The pace of asset quality improvement may slow in the near term as ICICI has seen a rise in its pool of low rated corporate loans. However, the broader trajectory remains unchanged. Moderating slippages and LLPs and improving RoAAs underpin our stance
M&M Financial Services:
Over the years, MMFS has seen a considerable reduction in stress levels. The company did not face any trouble raising funds after September 2018. This allowed it to gain market share and sustain superior growth even as vehicle sales plunged.
Given MMFS' deep rural presence, it stands to benefit from any uptick in rural macros. At current valuations, MMFS is an inexpensive play on rural India.
It remains the top pick amongst NBFCs space. Diversification across products and geographies along with virtually unbridled access to funds have allowed CIFC to offset some of the impacts of slowing vehicle demand. The asset quality is best in class amongst AFCs.
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