The risk aversion among investors could heighten in the days ahead with the war between Russia and Ukraine showing no signs of ebbing that has led to prices of global commodities from oil to farm products shooting through the roof. The benchmark indices fell 2.5 per cent and extended the losing streak in the fourth consecutive week ended on March 4 amid rising geopolitical tensions between Russia and Ukraine. In the truncated week, with high volatility, the market started on a positive note but lost momentum as the week progressed. The BSE Sensex fell 1,524.71 points (2.72 per cent) to end at 54,333.81, while the Nifty50 shed 413 points (2.47 per cent) to end at 16,245.4 levels last week.
Aside from geopolitics, investors will watch the outcome of the crucial state elections including Uttar Pradesh, Uttarakhand, Punjab, Goa, and Manipur on March 10, which could have an impact on the equity markets.
Ajit Mishra, vice president – research, Religare Broking Ltd., said: “In the short term, markets are very tricky and highly volatile but from a medium to long term perspective focus will shift back to fundamentals and sector-specific outcomes. So, at the current point in time, investors should be very selective in picking stocks. Investment can be made in stocks such as Bajaj Auto, Bharti Airtel, Sudarshan Chemical, Birlasoft, Biocon, and Inox leisure and in a staggered manner.”
Here’s are a Few Stock Recommendations by Ajit Mishra, vice president – research, Religare Broking Ltd. that may Sail you Through the Volatile Markets:
We believe Bajaj Auto is better placed than its peers, given its strong presence in the premium segment and exports. The recent recovery in the three-wheeler industry also bodes well for Bajaj Auto given its leadership position. Better mix and export incentives will drive healthy growth going forward. Also, it has a strong balance sheet, excellent free cash generation, high dividend payout, and robust return ratios (+20 per cent).
Bharti is best placed in the industry given its strong execution capabilities and wide subscriber base. We believe that it can re-rate further on the back of anticipated improvement in financial performance due to higher ARPU benefit, strong customer base, continued addition of 4G subscribers, and improved traction in other businesses. Moreover, strong cash flow generation would aid deleveraging of the balance sheet and also allow investment in new technology.
We believe the company is well placed to capitalize on opportunities in the global as well as Indian pigment sector driven by positive industry growth trend, high entry barrier in the sector, and wide range of products in their portfolio. Besides, they’re highly cost competitive amongst the peer group. Further, the company’s financial performance has been strong and this will continue in the future as well.
Birlasoft is one of the leading IT players which would benefit from the industry tailwinds, increased spending on digital and cloud services, and outsourcing work by companies. Its focus on platform-based digital initiatives, cloud adoption, and automation will drive future growth for the company. Besides it aims to win large deals, strengthening partnerships with global players and service customers across verticals with high-end digital solutions. Further, innovation, maintaining relationships with customers and retaining employees, and maintaining attrition level will be the key ahead.
Biocon is well placed in the pharma sector. The company’s focus will be on driving revenue and market share by expanding biosimilars, generics, and therapy portfolios, maintaining relationships with companies they have collaborated with, and expanding their geographical reach.
The easing restrictions from state governments coupled with a promising content line-up and strong pent-up demand would aid recovery for the multiplex industry. We like INOX in this space given its focus on enhancing the consumer experience, continued emphasis on expansion, effort on increasing spending per head, and increasing footfalls. The COVID-19 pandemic can aid further consolidation for the multiplex industry as small exhibitors would suffer due to a stressed liquidity position. INOX has been the front runner in the past and we expect the same trend to continue post normalization.