As many as 27 stocks in the BSE Largecap index have fallen 10-30% from their respective 52-week high recorded in 2019
Benchmark indices have fallen 6-8 percent from their respective record highs registered in June 2019 but the big carnage was seen in individual stocks, especially in the small and midcap space.
Largecaps displayed more resilience at a time when most of the stocks were trading in a downtrend. There are as many as 27 stocks in the S&P BSE Largecap index which have fallen 10-30 percent from their respective 52-week high recorded in the year 2019.
Some of the stocks which are available at a discount include names like L&T, Axis Bank, Bajaj Finance, Titan Company, Shree Cement, Siemens, Bajaj Finserv, Dr. Reddy’s Laboratories, HDFC Bank, HDFC, Bajaj Auto, and ICICI Bank.
So can we say all stocks in the largecap index are strong buy even though they might be available at a steep discount? Maybe not, say experts.
Some of the stocks which are part of the largecap index have seen massive wealth erosion in 2019 largely on account of fundamental or structural factors. But, there are some stocks which are still good buy on dips stocks.
Factors like economic slowdown, liquidity concerns, lack of any big bang announcements in budget and surcharge on super-rich including the FPIs (which has been rolled back recently), etc. led to muted investors sentiments, which have dragged the markets down in 2019.
“Amongst the stocks mentioned above, we believe one should invest in ICICI Bank, Bajaj Auto, Tech Mahindra, Aurobindo Pharma, BPCL, etc. in a phased manner as these companies are fundamentally sound with strong financials and have the potential to earn healthy returns over the long term. However, one should avoid investing in PNB (growth concerns) and UPL (high debt levels),” Ajit Mishra, Vice President, Research told Moneycontrol.
Generally, during market corrections fundamentally strong stocks correct lesser than the general market because of their inherent fundamental strength which can be seen in the table above.
“Stocks correcting more than 30-50 percent run the risk of falling further and therefore should be avoided especially if the index has corrected just by about 9 percent so far, which is the current situation,” Umesh Mehta, Head of Research, SAMCO Securities told Moneycontrol.
“Stocks like ICICI Bank, HDFC Bank, Bajaj Finance, Siemens, Shree Cement have all fallen less than 20 percent while the broader indices have fallen over 30-40 percent. By identifying such relatively strong performers investors can get to know about the fundamentals of sound companies. For eg., ICICI Bank, HDFC Bank, Dr. Reddy’s have the highest consensus brokerage targets. Investors should, therefore, focus on such largecap stocks,” he said.
The Nifty index is currently at about the same level as it was at the beginning of the year and is trading with marginal gains so far in the year 2019, but has fallen by about 9 percent from its respective 52-week high.
Correspondingly, stocks have corrected in various proportions from their highs and give an opportunity to investors to accumulate largecap blue-chip stocks at these levels which investors should make use off.
“Simultaneously, there are a few stocks which have delivered solid performance in Q1FY2020. We accordingly prefer stocks like Titan, Bajaj Finance, HDFC Bank and HDFC Ltd,” Atish Matlawala, Sr Analyst, SSJ Finance & Securities told Moneycontrol.
“We would also recommend accumulating stocks like ICICI Bank, Axis, Siemens, UltraTech Cement, Larsen & Toubro at different price intervals should they continue to see further price corrections,” he said.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.