Further correction cannot be ruled out amid the ongoing uncertainty in the global equity market, according to Antique Stock Broking. The brokerage advised investors to create a defensive portfolio with increased cash and accumulate quality names.
The benchmark equity indices BSE Sensex and NSE Nifty, which are hovering at their 52-week low levels, have plunged more than 12 per cent since October 1 last year. A couple of factors including rising interest rates and heavy selling by overseas investors weighed on market sentiment. The 30-share index Sensex scaled a 52-week low of 50,921.22 last week, while the 50-share Nifty index hit its 52-week low of 15,183.40.
Amid the ongoing selling on Dalal Street, Antique Stock Broking has identified 30 stocks which may outperform during weak growth and a rising interest rate environment.
Some of the stocks in the list included Bharti Airtel, Aditya Birla Fashion and Retail, Bata India, Eicher Motors, Indian Hotels, MRF, Sona Blw Precision Forgings, Tata Motors, Whirlpool of India, United Breweries, Natco Pharma, Ashok Leyland, and Relaxo Footwears.
Trent, Biocon, Torrent Pharmaceuticals, Bayer CropScience, Hero MotoCorp, Page Industries, Avenue Supermarts, Syngene International, Asian Paints, Kansai Nerolac Paints, Macrotech Developers, Dixon Technologies, TVS Motor, Marico, Adani Ports & SEZ, Polycab India, and Berger Paints India stood among other players in the list of fundamentally strong companies.
“Our empirical analysis based on 20 fundamental factors over the past 20 years suggests that companies with high earnings growth, EBIT margin improvement, and ROE improvement have consistently outperformed. These factors have also outperformed during periods of weak growth and rising interest rate environment. Accordingly, we have identified a list of 30 stocks which fit the bill,” the brokerage said in a report.
Antique Stock Broking is also overweight in sectors like capital goods and IT services (sectors with a strong medium-term growth outlook). On the other hand, it has turned slightly underweight on banks because of macro headwinds.
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