Struggling what to buy in a volatile market that is still down by over 20 percent from the recent high? Elara Capital in its latest strategy report might have just made your job simpler.
COVID-19 has roiled the global equity markets, akin to the 2008 Global Financial Crisis (GFC), amid concerns around global recession and a steep fall in corporate earnings.
Post a steep correction in India markets, there are some signs which suggest that the market is reaching its bottom (easing market volatility, the start of beta trade, peaking rupee depreciation, an uptick in US markets, and easing fears of economic slowdown).
Since 2006, there have been 18 instances of steep market corrections (Nifty corrected in excess of 10%). Juxtaposing, the domestic and global macroeconomic environment prevailing during the 18 instances of deep market corrections and recovery phase, the brokerage firm draws empirical evidence and crystal gaze the market performance during the recovery phase of COVID19 market correction.
Based on historical evidence, it has identified stocks that could be the potential rebounders once the deep correction phase bottoms out.
“We have drawn our portfolio for market recovery on the basis of: (a) “Sprinter” stocks who have demonstrated strong and consistent performance characteristics and (b) “All Weather” stocks that are not part of “Sprinter” group and score heavily on the market recovery phase,” said the report.
There are 15 stocks which could lead market recovery or are likely to outperform when market recovers that include names like HDFC Bank, Kotak Mahindra Bank, Bajaj Finance, Axis Bank, Divi’s Laboratories, and Bata India etc. among others.
Elara has defined Sprinter stocks are those that outperform consistently across the first month, first to the third month and third to the sixth month of the recovery phase) – Bajaj Finance and Indusind Bank.
“The All-weathers” stocks that outperform both during the correction and recovery phase such as HDFC Bank among others.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.