A further correction cannot be ruled out amid continued uncertainty in the global equity market, according to Antique Stock Broking. The brokerage advised investors to build a defensive portfolio with increased cash and accumulate quality names.
The benchmark BSE Sensex and NSE Nifty stock indices, which are hovering at 52-week lows, have plunged more than 12% since October 1 last year. Two factors, including rising interest rates and strong selling by foreign investors, weighed on market sentiment. The 30-stock Sensex index hit a 52-week low at 50,921.22 last week, while the 50-stock Nifty index hit its 52-week low at 15,183.40.
Amid ongoing selling on Dalal Street, Antique Stock Broking has identified 30 stocks that are likely to outperform on weak growth and rising interest rates.
Some of the stocks on 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 Shoes .
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 was among the other players on the list of fundamentally strong companies.
“Our empirical analysis based on 20 fundamental factors over the past 20 years suggests that companies with strong earnings growth, improved EBIT margin and improved ROE have consistently outperformed. These factors have also outperformed during periods of weak growth and rising interest rates. As a result, we have identified a list of 30 stocks that fit the bill,” the brokerage said in a report.
Antique Stock Broking is also overweight in sectors such as capital goods and IT services (sectors with strong medium-term growth prospects). On the other hand, he became slightly underweight banks due to macroeconomic headwinds.
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