Risk aversion among investors could increase in the coming days, as the war between Russia and Ukraine shows no signs of ebb and flow that have sent prices of global commodities, from oil to agricultural products, skyrocketing. Benchmark indices fell 2.5 percent, extending the losing streak in the fourth consecutive week ending March 4 amid mounting geopolitical tensions between Russia and Ukraine. In the truncated week of high volatility, the market started off positive but lost momentum as the week progressed. The BSE Sensex fell 1,524.71 points (2.72 percent) to end at 54,333.81, while the Nifty50 lost 413 points (2.47 percent) to end at 16,245.4 levels last week.
Geopolitics aside, investors will watch the outcome of the pivotal state elections including Uttar Pradesh, Uttarakhand, Punjab, Goa and Manipur on March 10, which could have an impact on stock markets.
Ajit Mishra, Vice President – Research, Religare Broking Ltd., said:In the short term, the markets are very difficult and highly volatile, but from a medium to long term perspective, the focus will shift back to fundamentals and sector specific results. So at this point, investors need to be very selective when choosing stocks. There can be diversified and diversified investments in stocks such as Bajaj Auto, Bharti Airtel, Sudarshan Chemical, Birlasoft, Biocon and Inox Leisure.”
Here are a few stock recommendations from Ajit Mishra, Vice President – Research, Religare Broking Ltd. that can guide you through the volatile markets:
We believe that Bajaj Auto is better placed than its competitors given its strong presence in the premium and export segments. The recent recovery in the tricycle industry also bodes well for Bajaj Auto given its leadership position. A better mix and export incentives will stimulate healthy growth in the future. It also has a strong balance sheet, excellent free cash generation, high dividend payments and robust yield ratios (+20 percent).
Bharti is best placed in the industry for its strong execution capabilities and broad subscriber base. We believe it may be reassessed reflecting the projected improvement in financial performance from a higher ARPU advantage, strong customer base, continued addition of 4G subscribers and improved traction in other businesses. In addition, strong cash flow generation would promote deleveraging of the balance sheet and also allow for investment in new technology.
We believe the company is well positioned to take advantage of opportunities in the global and Indian pigments sector, driven by a positive industry growth trend, a high barrier to entry in the industry and a wide range of products in their portfolio. In addition, they are highly cost competitive among the peer group. Furthermore, the company’s financial performance has been strong and will continue to be so.
Birlasoft is one of the leading IT players that would benefit from industry tailwinds, increased spending on digital and cloud services, and corporate outsourcing. The focus on platform-based digital initiatives, cloud adoption and automation will drive the company’s future growth. In addition, it strives to win big deals, strengthen partnerships with global players and customers in various industries with high-quality digital solutions. Furthermore, innovation, maintaining customer relationships and retaining employees and maintaining churn will be key.
Biocon is well positioned in the pharmaceutical sector. The company’s focus will be on driving sales and market share by expanding biosimilars, generics and therapy portfolios, nurturing relationships with companies they have partnered with and expanding their geographic reach.
Stainless Steel Leisure
The easing of state government restrictions, coupled with a promising content supply and strong pent-up demand, should aid the multiplex industry’s recovery. We love INOX in this space for its focus on improving the consumer experience, its continued emphasis on expansion, efforts to increase per capita spend, and increasing visitor numbers. The COVID-19 pandemic could help further consolidate the multiplex industry as small exhibitors would suffer from a strained liquidity position. INOX has been the frontrunner in the past and we expect the same trend to continue after normalization.
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