Stock analysis is used by traders to make buy and sell call. It’s an approach to make informed decisions while investing in stocks. Stock analysis can be categorised into – fundamental analysis and technical analysis. Fundamental analysis is evaluation of data from sources, including financial records, economic reports, company assets, and market share. Analysts typically study the company’s financial statements – balance sheet, income statement, cash flow statement, and footnotes. These statements are made available to the investors in the form of quarterly earnings, disclosures to stock exchanges in compliance with the Securities and Exchange Board of India (Sebi) norms. In fundamental analysis, the analysts particularly check for a company's core income, income from other sources, profitability, guidance, assets and liabilities and debt ratio among other parameters. The other method, i.e. the technical analysis focuses purely on statistical data. It works on two assumptions; one, the stock price reflects the fundamentals. Second, the study of past and present movement in prices can help determine the future price trends. Technical analysis primarily deals with price, volume, demand and supply factors. This method is effective only when supply and demand forces influence the market. However, when outside factors are involved in a price movement, technical analysis may not be successful. More
Brokerage firm Credit Suisse says a pick-up in Accenture’s revenue growth and strong bookings augur well for the demand environment.
Since FY17, the market's performance was mostly driven by a handful of stocks, as broader indices underperformed significantly.
Prabhudas Lilladher believes that current uncertainty is a passing phase and return to normalcy will result in several beaten down segments bouncing back strongly from FY22.
One should always avoid investing in bad quality businesses because as is said a rising tide lifts all the boats but the end outcome is always bad in investing if one ignores the quality aspect, Shailendra Kumar of Narnolia advised.
On the decisive crossing of 12,400 levels would lift the Nifty to 13,300 levels, said Shrikant Chouhan of Kotak Securities.
The Q2FY21, so far, witnessed robust numbers from IT, Pharma, Auto components, select banks, and cement sector companies.
As the September quarter earnings bouyed market sentiment and increased hope for strong earnings growth in coming years, brokerages upgraded majority of quality stocks in current month.
Vineeta Sharma, Head of Research at Narnolia Financial Advisors said the robust results posted by IT companies were ahead of their estimates given the increased demand for digital services in the times of COVID-19.
As the COVID-19 pandemic has driven an increased focus on digital transformation, tech spending is expected to hold up better as customers invest to ensure business continuity and seamless operations.
The Nifty IT index jumped 27 percent year-to-date and 77 percent from March 23's low point, while Pharma index was up 46 percent and 82 percent in same periods.
HDFC Securities maintained positive outlook on IT sector despite the sector recently re-rating to +2-standard deviations (SD) valuations.
While the market has rallied smartly, the rally has been highly concentrated with the top 15 stocks contributing over 70 percent of the returns.
IT and pharma are preferred themes by experts after June quarter earnings
Infosys fired almost on all cylinders in June quarter earnings, which gave confidence to investors and as a result six out of 10 fund houses raised exposure to the stock last month.
In muted earnings expectations for Q1FY21, beats were much higher than misses and that was one of major reasons and confidence booster for equity market not only in India but globally.
Infosys posted an 11.5 percent YoY growth in net profit at Rs 4,233 crore while Wipro posted a flat 0.11 percent YoY growth in net profit at Rs 2,390.40 crore.
The market's valuations have turned higher than long-period average and investors should be cautious and selective in picking stocks, say experts .
Experts upbeat on Tata Consultancy Services and Infosys, though the lockdown and its effect on sectors like hospitality, travel and retail will have an impact on their earnings in the short to medium term.
The break of 10,550 – 10,600 level will open the gate for 11,000 level in the coming trading sessions. In case the index violates 10,000, a sharp decline will take place which could drag the index towards 9,700 – 9,500 levels.
India VIX is trading flat, holding its 200-day average and any spike above its medium-term average at 35 levels could increase volatility.
On the technical front, now 10,050 mark would act as an immediate hurdle for Nifty where its 100-days exponential moving average is placed on daily charts.
While the banks and NBFCs have been dominating the benchmark indices, market experts say emerging sectors such as pharma are gearing up to take the front seat.
Ashwani Gujral of ashwanigujral.com recommends selling Kotak Mahindra Bank with a stop loss of Rs 1,200, target at Rs 1,080 and Tata Consultancy Services with a stop loss of Rs 1,730, target at Rs 1,660.
Motilal Oswal feels markets may continue to fall in near term, and that's the time to start becoming greedy. Hence the brokerage suggests accumulating on a gradual basis.
Nifty Bank index has lost around 3 percent from the previous week and is trading just below 20,000-mark.