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Aditya Sood, Fund Manager - InCred Multicap Fund said that “Buy Fear and Sell Greed” is our core philosophy which we have followed through multiple cycles by imposing self-constraints in terms of capital returned in great markets and capital deployed in tough markets.

In an interview with Zeebiz's Kshitij Anand, Sood highlights that depending on the cycle, one needs to be overweight or underweight on equities as a part of dynamic asset allocation.&nbsp; It is always advisable to consult an expert before investing. Edited excerpts:

Q) A war-like situation has emerged. It is new to many investors who entered D-Street back in 2020. Is it time to follow Warren Buffett's methodology – be greedy when others are fearful?

A) In the very short-term, and especially daily, market movement is primarily guided by investor sentiment which is usually influenced by greed, fear, and behavioural biases.

So, it might not be relevant to dissect the equity market on a daily market movement basis.

Q) What does history tell us about various Black swan events which have unfolded in history and what is the key takeaway for investors?

A) The first two decades of the 21st century have been interrupted by dramatic events, some of which were expected and many of which caught us off-guard.

These crises have stemmed from both financial market instability as well as geopolitical events. Either way, they have been both the causes and effects of the underlying trends that have driven global affairs over the last two decades.

One event that shook the modern world and had a sharp impact on financial markets, as well as global stability was the 9/11 attacks and the ensuing response.

Similarly, the Arab Spring, Brexit, the US-China trade war, and conflicts on the Indo-China border have all had a severe impact on financial markets and create periods of extreme fear and uncertainty.

Q) Does it make sense for investors to invest in India now and why?

A) India is certainly in the position to accelerate in the coming years as we are in the process of mean reversion of corporate profits.

The main contributors to the mean reversion of corporate profitability are high tax collection and the reduction in covid related expenses, improvement in capacity utilization, Housing upcycle due to improvement in affordability, and low home loan rates.

This has also coincided with the record low cost of capital for Indian corporates.&nbsp;&nbsp;

Q) When everything is available at a discount what should be stock selection criteria for long-term investors?

A) “Buy Fear and Sell Greed” is our core philosophy which we have followed through multiple cycles by imposing self-constraints in terms of capital returned in great markets and capital deployed in tough markets.

Depending on the cycle, one needs to be overweight or underweight on equities as a part of dynamic asset allocation.&nbsp; It is always advisable to consult an expert before investing.

Q) What’s your outlook for the mid-and small-cap segment and how should investors view the space in FY23?

A) There are more than 1000 stocks that corrected by more than 40% from the peak. There are also pockets of quality stocks that have been flat in the rising market for 3-5 years.

The mean reversing in earnings coupled with improving earnings outlook should help small and midcaps generate decent returns from hereon.

Q) To what extent can the rising crude oil prices and inflation dent India Inc’s fortunes in FY23?

A) Russia is the second-largest oil exporter in the world after Saudi Arabia. The current uncertainty due to Russia- Ukraine war may lead to a hike in oil prices to an extent however this this may not sustain for the long term.

Q) Your estimates for FY23 corporate earnings growth?

A) We are in the early stage of the earnings recovery cycle, corporate profits as a percentage of GDP bottomed out at 1.6% in FY20 after making a high of 7.2% in FY 2008.

We are mean reversing in terms of corporate profitability. Favorable and conducive cost of the capital environment with capacity utilization improving &amp; lower interest cost for corporates are all aiding selective sectors and companies to outperform in coming months.

Q) Which are the sectors you would like to add in your portfolio?

A) Here is a list of top sectors that investors could consider for investment:

Auto:

In this quarter there is a margin compression however we expect more contribution of earnings from a range of sectors such as auto as semiconductor chip shortage started to subside in Q3, leading to expectations of improving capacity utilization for PV makers.

Financials:

Financials as loan growth picks up on account of improvement in working capital demand, private banks continue to gain market share.

IT &amp; ITES:

IT &amp; ITES sector companies to fare well at the back of positive digitization/cloud migration.

Pharma:

Pharma sector should contribute meaningfully to earnings based on two elements a) domestic formulation of companies whose business model is driven by pricing power and hence they can take a price hike in line with WPI to materialise in Q1, and b) API (active pharma ingredient) companies would be in a position to pass on the cost inflation due to nature of the contracts which usually happens with 1 – 2 quarters of lag.

Q) What is your view on the trajectory of interest rates in India as well as globally?

A) The interest rate is going to be an outcome of the G3 (US central reserves, Bank of Japan &amp; ECB) central banks and balance sheet expansion.

Going forward the trajectory of interest rates would be determined by demand &amp; supply-side factors contributing to inflation.&nbsp;&nbsp;

We believe a lot of inflation was driven by supply-side constraints which would continue to be elevated in a world wherein geopolitical factors are contributing majorly.

Demand-driven inflation is more sticker and supply-side factors are more transitory hence one would also have to look at the components of inflation that are driving country-specific inflation.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

In an interview with&nbsp;Zeebiz's Kshitij Anand, Sood highlights that depending on the cycle, one needs to be overweight or underweight on equities as a part of dynamic asset allocation.


Dalal Street Voice: Russia-Ukraine conflict brings back focus on auto, financial sectors: Aditya Sood of InCred

Tech Mahindra Ltd rallied over 50 per cent in the last year compared to 5 per cent upside seen in the Nifty50 in the same period. The IT major outperformed benchmark indices on a 1-week, and 1-month basis amid volatility from the Russia-Ukraine war.

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The IT stock rose over 4 per cent in a week and remained flat on a monthly basis compared to 6 per cent, and 8 per cent fall seen in the Nifty50 in the same period.

The stock with a market capitalisation of nearly Rs 1.4 lakh cr hit a 52-week high of Rs 1837 on 30 December but then the trend turned sideways. However, the stock remains resilient despite the volatility caused by the Russia-Ukraine war.

The stock recently tested its 52-week low placed at Rs 1394 on Feb 24 but managed to hold above the crucial long-term moving average which resulted in a bounce back despite steep decline seen in benchmark indices.

The momentum should continue as long as the stock holds above the long-term average, and the first target can be placed at Rs 1560 that translates into an upside of over 7 per cent from Rs 1,453 recorded on 4 March, suggest experts.

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The long-term weekly chart of Tech Mahindra shows a structural similarity (of varying degree) over past 5 years.

The initial leg saw prices move from 356 in June 2017 to 838 in March 2019, thereby returning around 2.5x in the 9-month period.&nbsp;&nbsp;

Within this move we saw the prices valeting in a parallel channel for FY 2018-19 and FY 2019-20. The pandemic lows saw prices correcting to 471 (a higher low as compared to those created in 2017).

Post this corrective move, we saw a rational uptrend till December 2021 when prices created an all-time highs at 1838. There has been a welcome correction post wherein prices have respected the 38.2% Fibonacci retracements at 1315.

“The short-term chart of Tech Mahindra shows testing of the 200 DMA @ 1391. Post this test of levels last week, we have seen a bullish weekly candle with close equivalent to the high of the week,” said Pushkaraj Sham Kanitkar - VP (Equities) at GEPL Capital.

“The second level of breakout on the daily chart will once get confirmed when prices break above the level of 1515, the earlier 23.6% retracement. The breakout will also bring it in close contention of the confluence 10 Week MA (50Day) and 20 Week MA (100Day) currently around 1565,” he said.

“A daily close above 1515 will kickstart a further burst of momentum, but current pricing augurs well from the risk-reward perspective. One can eye upsides to the confluence of moving averages around 1560 as an immediate target, the all-time HIGHs will stand as a secondary target,” added Kanitkar. Traders can place an initial stop loss somewhere below 1295, a bit below the recent swing low.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

&nbsp;

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The IT major outperformed benchmark indices on a 1-week, and 1-month basis amid volatility from the Russia-Ukraine war.

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Technical Check: 50% returns in a year! Tech Mahindra survives sell-off on D-St due to Russia-Ukraine war; should you buy?

Osho Krishan, Sr. Analyst - Technical &amp; Derivative Research, Angel One Ltd said that a breach of 16000 on the downside with VIX near 29 could bring in a faster fall towards the mentioned targets of 15,400 – 15,000.

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In an interview with Zeebiz's Kshitij Anand, Krishan highlights that as far as levels are concerned, 16000 –15900 is to be seen as immediate supports, whereas on the higher side, 16500 followed by 16600 are considered strong resistances. Edited excerpts:

Q) Benchmark indices shed almost 3% in the week gone by and the weakness continues on Monday as well. What has led to the price action on D-Street?

A) Our domestic market has witnessed an intense beating as both the major indices Nifty and Bank Nifty plummeted over 2.48 and 5.55 per cent, respectively in the week gone by.

For the first few days, the Nifty50 remained in a range of 300 points with volatile swings, wherein 16500 on the index provided some support.

Though on Friday, the global worries once again spooked market participants by not only opening below this level but went on even to challenge 16200 on an intraday basis and finally concluded the week at 16245 levels.

If we meticulously observe Friday’s price action, we can see moderate damage in key indices, but individual stocks were falling in a bottomless pit.

Hence, markets are trading in an oversold situation for the last few days. This correction has a lot to do with the geopolitical concerns with respect to Russia and Ukraine.

So, until things do not stabilize there, the market is likely to sway on news flows and one should brace up for similar volatility and surprises on either side.

Although such war-like scenarios are always tricky, we can see a negative trend on weekly time frame charts. In addition, the falling slope of the ‘RSI-Smoothened’ oscillator is an indication of further weakness.

The Nifty50 has reached our initial target of 16200, we do not want to pre-empt any near-term bottom here.

Q) What are the key levels that one should track over the coming week on Nifty and Nifty Bank and how should investors prepare themselves?

A) From an investors’ point of view, this is certainly an excellent opportunity to bag quality propositions in a staggered manner. Still, it would be difficult for traders to say that worse is behind us.

We do not want to sound too pessimistic but looking at the current scenario, it won’t be surprising to see Nifty entering sub-16000 terrain.

In the worst-case scenario, Nifty could plunge towards the previous consolidation zone of 15500. However, we need to be abreast of how things pan out over global development. In case of any positive surprises in the coming period, we will keep a close eye on a few scenarios.

As far as levels are concerned, 16000 –15900 is to be seen as immediate supports, whereas on the higher side, 16500 followed by 16600 are considered strong resistances.

For Nifty Bank, all the indicators have turned southwards as the bears turned on their furious mode.

As far as levels are concerned, the previous swing low of 34000 odd levels could be considered the last technical support, breaching which things could get worse and attract fresh short positions towards the 33000 zone.

On the contrary, 35000-35200 is expected to act as an immediate hurdle, followed by the sturdy wall of 200 DEMA placed near the 36200 odd zones.

With the disruptor of the technical setup and the influence of the ongoing global crisis, the further movement of the index remains tentative.

Q) India VIX above 29. What does it suggest? Should investors brace for more volatility? What does the history suggest?

A) The volatility index is at an alarming zone, as any more upside in the VIX could have repercussions on the equity market. Technically, the index is on a stiff resistance zone and could refrain from soaring higher.

Although any breach above the 30 zones could be devastating for the market participants as bears could further tighten their grip and aggravate the overall market sentiments.

Historically, India VIX has tested the sub 30 levels for four consecutive years in which the year 2020 has seen the breakout, and we all have witnessed the carnage.

Hence, it is an alarming zone that we must keep close track of. At the same time, we also should understand that this is due to geopolitical concerns, and such issues are very sensitive and deceptive at times, we would take one step at a time.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

In an interview with&nbsp;Zeebiz's Kshitij Anand, Krishan highlights that as far as levels are concerned, 16000 –15900 is to be seen as immediate supports, whereas on the higher side, 16500 followed by 16600 are considered strong resistances.


Nifty could plunge towards 15500 in worst-case scenario: Osho Krishan of Angel One

Mehul Kothari AVP – Technical Research, Anand Rathi Shares &amp; Stock Brokers said that a breach of 16000 on the downside with VIX near 29 could bring in a faster fall towards the mentioned targets of 15,400 – 15,000.

In an interview with Zeebiz's Kshitij Anand, Kothari highlights that history suggests that major bottoms are being made when the VIX is above 30 mark; hence, if at all this move comes then that could be the time for bulls to come back. Edited excerpts:

Q) Benchmark indices shed by about 3% in the week gone by. What led to the price action on D-Street?

A) The month of February 2022 was a frightening one for the world and all the equity markets. A month before now, who would have thought that the world equity markets would succumb to one of the major geopolitical issues.

The invasion of Ukraine by Russia brought the bears into action where we witnessed constant selloff in the equity markets and a strong surge in the commodity markets.

The Brent crude rallied to $120 from the close of $90 (January 2022) and that brought tremendous pressure on our equity markets.

The Nifty50 index tumbled to breach the support placed at 16,800 and then towards 16,400 to reach the 16,200 mark for the week ended 4 March.

Q) How should investors prepare themselves for the coming week. What are the key levels that one should track for the coming week on Nifty and NiftyBank?

A) The recent crack in the Nifty50 has forced the index to sustain below 16,800 mark for quite some time. This has confirmed a breakdown from the parabolic trend line which was acting as a support since Dec 2021.

This has also resulted in a breakdown from the pattern which resembles Head and Shoulder. The pattern has a theoretical target of 15,400 – 15,000 levels and the pattern would be negated only a close above the 17300 mark.

Going ahead, things could get worse for the markets since we have a few more events like UP election results as well as the possibility of a US Fed rate hike.

For the immediate time frame, 16000 would be a strong support, and below that we could be heading for the mentioned targets.

We would be out of the woods once Nifty50 closes above the 17300 mark. With VIX sustaining above 25 mark it would be a difficult time for the traders to judge the direction and hence we advise them to avoid any aggressive bets in the Future.

On the other hand, long-term investors are advised to take this fall as an opportunity to accumulate their favourite stocks.

BANKNIFTY is on the verge of a breakdown from rising channel and the confirmation for the same would come below the 34000 mark.

The index spent over a year in this rising channel and hence the breakdown will be crucial. If the breakdown happens then we can see a further fall of 7% to 10% in the NIFTY BANK index.

On the contrary, there are heavy short positions in the banking index and if it holds on to the given support then we could witness a short-covering relief rally.

In such a scenario, the 36000 – 37000 zone could be the zone to watch out for. For the long term we still maintain our stance that banking stocks can outperform but for that, investors should adopt an accumulate strategy for further dips.

Q) Sectorally, auto, banks plunged the most. What led to the price action and do you think the pressure could continue in the coming week as well?

A) With regards to AUTO, the rising crude prices have been impacting near-term auto sales, and maybe this is the key reason for their underperformance.

On the other hand, for banks, higher inflation expectations might be impacting consumption demand in the near term. This could have some impact on credit growth for banks which are already struggling to achieve higher credit growth.

Q) India VIX above 29. What does it suggest? Should investors brace for more volatility? What does the history suggest?

A) Well, till the time India VIX sustains above 25, we expect more wild moves in the market since there is a breakout in VIX on the weekly scale which has an upside target of around 40 -45.

A breach of 16000 on the downside with VIX near 29 could bring in a faster fall towards the mentioned targets of 15,400 – 15,000.

History suggests that major bottoms are being made when the VIX is above the 30 mark; hence, if at all this move comes then that could be the time for bulls to come back.

Q) What should investors do with small &amp; midcap stocks? Time to buy or time to exit high beta, high PE stocks? What are your views?

A) It’s still not the correct time to go aggressively long since we mentioned above there is a possibility of one more round of pain.

There could be a small bounce if we do not break 16000 but we are still not sure of a bottom formation. The ideal range to start looking for midcaps would be near to 15500 or above 17000.

Q) Any top 3-5 stocks that traders can look at for the March series?

A) Here is a list of top trading ideas for the March series -&nbsp;&nbsp;

Bajaj Finance: Sell on rise| LTP Rs 6539| Stop Loss Rs 7050| Target Rs 5900

Being from the group of financials’ Bajaj Finance too underwent heavy selling in the recent sessions. On the daily and weekly chart, we are witnessing a range breakdown below 6575 and that is the first sign of weakness.

In addition, the stock has decisively closed below its 200-Days EMA and 200-Days SMA after September 2020 which indicates a fresh downside.

Thus, traders can sell the stock on rise between 6600 - 6700 with a stop loss of 7050 for an upside target of 5900 in the next 3 – 4 weeks

ITC: Buy on dips| LTP Rs 225| Stop Loss Rs 210| Target Rs 245

Being defensive in nature, ITC has been a top outperformer in this recent crack which dictates inherent strength in the counter.

On the technical front, for over a year, ITC has never sustained below the 200 mark which suggests that the downside is limited.

As per the chart, it is evident that the stock is trading well above the placement of the Ichimoku indicator on the daily scale. The stock is trading in a range formed by a rising trend line and the upper range comes around the 280 mark.

Thus, traders are advised to buy the stock in the range of 225 - 220 with a stop loss of 210 on a closing basis for the upside potential target of 245 in the coming 1 – 2 months.

Tech Mahindra: Buy| LTP Rs 1453| Stop Loss Rs 1330| Target Rs 1650

Similar to a few other IT names, even Tech Mahindra is hovering just above its 200 DEMA and 200 DSMA placed near the 1400 mark. Along with Tech Mahindra, most of the other IT stocks too are signaling a possibility of a bounce back.

Even the daily RSI is now above the 40 mark which indicates strength. Thus, traders can buy the stock near the 1450 mark with a stop loss of 1330 for the upside target of 1650 in the next 3 – 5 weeks.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

In an interview with Zeebiz's Kshitij Anand, Kothari highlights that history suggests that major bottoms are being made when the VIX is above 30 mark.


ITC, Tech Mahindra top buys for March series while investors can go short on Bajaj Finance: Mehul Kothari of Anand Rathi

George&nbsp;Heber&nbsp;Joseph, CEO-CIO,&nbsp;ITI&nbsp;Mutual Fund,&nbsp;says&nbsp;that&nbsp;investors wanting&nbsp;to&nbsp;invest&nbsp;in&nbsp;lumpsum should&nbsp;invest&nbsp;in&nbsp;Balanced&nbsp;Advantage&nbsp;funds&nbsp;while more conservative&nbsp;investors can use the Conservative Hybrid&nbsp;funds. 
 
In an interview&nbsp;to&nbsp;Zeebiz's Kshitij Anand,&nbsp;Joseph&nbsp;suggests that while valuations have come down from the recent peaks, they have not gone&nbsp;to&nbsp;very low levels that were seen in the black swan events. Edited excerpts: 
 
Q) A&nbsp;war-like situation has emerged. It is new&nbsp;to&nbsp;many&nbsp;investors who entered D-Street&nbsp;back in 2020. Is it time&nbsp;to&nbsp;follow&nbsp;Warren Buffett's methodology – be greedy when others are fearful? 
 
A) The&nbsp;ongoing Ukraine-Russia conflict and the resultant correction is providing a good opportunity&nbsp;to&nbsp;investors&nbsp;to&nbsp;increase their equity exposure. 
 
The&nbsp;war&nbsp;and resultant oil price hike can have some near-term impact&nbsp;on&nbsp;India, but it does nothing&nbsp;to&nbsp;change the fundamental story about India and its improving growth trajectory. 
 
Thus, it provides a good opportunity&nbsp;to&nbsp;accumulate positions in the equity market, treating volatility as a friend. However,&nbsp;investors need&nbsp;to&nbsp;adopt another&nbsp;of&nbsp;Mr. Buffet’s virtue ie Patience, as the starting valuations at current levels are not cheap.

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Q) What does history tell us about various Black swan events which have unfolded in history and what is the key takeaway for&nbsp;investors? 
 
A) Significant negative events have led&nbsp;to&nbsp;large corrections in equity markets, which have been excellent entry points for long term&nbsp;investments. Eg. the Lehman crisis in 2008, the 9/11 event in September 2001, and more recently the Covid-19 pandemic in March 2020. 
 
That is because entrepreneurs continue&nbsp;to&nbsp;find opportunities&nbsp;to&nbsp;develop good business despite very adverse macro situations. The governments also respond with reform measures. 
 
Also, the crisis brings down the valuations&nbsp;to&nbsp;very attractive levels, laying the ground for making significant returns in equity markets. 
 
However, the current Ukraine conflict was not a&nbsp;total surprise, and I would not like&nbsp;to&nbsp;yet equate it with a Black Swan event. Also, while valuations have come down from the recent peaks, they have not gone&nbsp;to&nbsp;very low levels that were seen in the black swan events. &nbsp; 
 
Q) Does it make sense for&nbsp;investors who plan&nbsp;to&nbsp;invest&nbsp;say Rs 10L now or should wait for a dip? 
 
A) The economic impact&nbsp;of&nbsp;geopolitical events is more difficult&nbsp;to&nbsp;predict than the impact&nbsp;of&nbsp;pure economic crises such as the global financial crisis in 2008 or the taper tantrum in 2013. 
 
Also, the Ukraine event is different from what we have seen in the last two decades such as US interventions in Syria, Libya, or Afghanistan. 
 
It is coming at a time when overall market valuations are not very cheap. Hence, we would advise&nbsp;investors&nbsp;to&nbsp;invest&nbsp;gradually over the next three months. 
 
Q) Many recent&nbsp;investor&nbsp;MF&nbsp;portfolios might have lost steam and wiped out most&nbsp;of&nbsp;the gains made in last 2 years. Things which portfolio&nbsp;investors should avoid doing&nbsp;amid&nbsp;the current turmoil? 
 
A) Markets have seen a correction&nbsp;of&nbsp;8-9% from the October 2021 peak, which is more like a correction in a bull market. Thus, it is unlikely that gains&nbsp;of&nbsp;the last two years have been lost.

The impact&nbsp;of&nbsp;the Ukraine conflict&nbsp;on&nbsp;India is more in terms&nbsp;of&nbsp;the spike in oil prices and it does not alter the longer-term fundamental story&nbsp;of&nbsp;improving economic growth in India. 
 
Investors should therefore keep the faith and use the volatility as a friend&nbsp;to&nbsp;gradually increase equity allocation over the next three months. 
 
They should focus&nbsp;on&nbsp;the medium-term prospects and not get drawn into the day-to-day volatility affect their sentiments. &nbsp; 
 
Q) Many new NFO was launched post Budget. In light&nbsp;of&nbsp;rising geopolitical concerns as well as rising interest rates – how should&nbsp;investors pick and choose&nbsp;funds? Which&nbsp;MF&nbsp;theme is suitable for long term&nbsp;investment? 
 
A)&nbsp;Investors wanting&nbsp;to&nbsp;invest&nbsp;in&nbsp;lumpsum should&nbsp;invest&nbsp;in&nbsp;Balanced&nbsp;Advantage&nbsp;funds. More conservative&nbsp;investors can use the Conservative Hybrid&nbsp;funds, which has&nbsp;the potential&nbsp;to&nbsp;give&nbsp;better returns than traditional savings products and with much lower volatility than equity or aggressive hybrid&nbsp;funds. 
 
Investment in equity&nbsp;funds&nbsp;should be done systematically over the next three&nbsp;to&nbsp;four months in the form&nbsp;of&nbsp;daily/weekly STPs or SIPs. 
 
Q) When everything is available at a discount what should be stock selection criteria for long term&nbsp;investors? 
 
A) As stated earlier, valuations and markets have seen some correction from the peak, but they are nowhere near the discount territory. &nbsp; 
 
We feel the domestic cyclical sectors such as banking, capital goods infrastructure, real estate are more attractive as India’s economic growth is&nbsp;on&nbsp;an improving trajectory. 
 
Investors should focus&nbsp;on&nbsp;the earnings growth prospects over the next two years, the strength&nbsp;of&nbsp;the business model, cash flow generation, and balance sheet strength&nbsp;of&nbsp;the companies. 
 
(Disclaimer: The views/suggestions/advices expressed here in this article is solely by&nbsp;investment experts. Zee Business suggests its readers&nbsp;to&nbsp;consult with their&nbsp;investment advisers before making any financial decision.)

George&nbsp;Heber&nbsp;Joseph, CEO-CIO,&nbsp;ITI&nbsp;Mutual Fund,&nbsp;says&nbsp;that&nbsp;investors wanting&nbsp;to&nbsp;invest&nbsp;in&nbsp;lumpsum should&nbsp;invest&nbsp;in&nbsp;Balanced&nbsp;Advantage&nbsp;funds&nbsp;while more conservative&nbsp;investors can use the Conservative Hybrid&nbsp;funds


Dalal Street Voice: Planning to invest lump sum amid Russia-Ukraine war? Bet on Balanced Advantage funds, says George Heber Joseph of ITI MF

Indian market closed lower for the third consecutive day in a row on Friday pushing benchmark indices below crucial support levels. The S&amp;P BSE Sensex was down by more than 700 points while the Nifty50 closed below 16300 levels.

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Sectorally, selling pressure was seen in auto, metals, consumer discretionary, consumer durables, and realty stocks.

Stocks that were in focus include Asian Paints which closed with losses of nearly 5 per cent, IRCTC fell by over 6 per cent and Dr Reddy’s Laboratories rose over 2 per cent on Friday.

Here's what Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd, recommends investors should do with these stocks when the market resumes trading today:

Asian Paints: Hold

In this week, the stock has corrected by over 12 per cent. Before the sharp price cut, the stock made a couple of attempts to sustain above the 200-Day SMA, but due to constant selling pressure, it failed.

After a long time, the stock is now consistently trading below the 200-Day SMA.&nbsp; We are of the view that, the short-term texture is still on the weak side, but due to the oversold situation, we could witness a quick pullback rally in the future.

The level of 2,700 and 2,650 would be the immediate support zone for Asian Paints Ltd. If the stock trades above the same, then a pullback rally will continue that could take the stock towards 2860-2920.

On the flip side, a fresh round of selling is possible if it succeeds to trade below 2650. Below which the chance of hitting 2600-2550 would turn bright.

IRCTC: Buy

On last Friday, the stock opened with a gap down and maintain weak momentum throughout the day. Currently, the stock is witnessing a non-directional activity.

Perhaps, traders are waiting for either side's breakout. For the traders, 720 -700 would be the key support areas and 800-820 would act as an immediate hurdle.&nbsp;&nbsp;

Below 700, there is a strong possibility of a further downside up to 675-650 which can’t be ruled out. However, above 800, the pullback rally may continue till 860-880.

Dr Reddy’s Laboratories: Hold

For the last couple of months, the stock is consistently facing selling pressure. In the quarter so far, it has corrected by over 22 per cent.

After a sharp fall, finally, it took the support near 3700. It has also formed a bullish candle on the daily charts.

We are of the view that the medium-term trend is weak but due to short-term oversold formation, the reversal formation will continue in near future.

Technically, 3700-3650 would be the key support level, above which the stock could move up to 4000-4075.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

Indian market closed lower for the third consecutive day in a row on Friday pushing benchmark indices below crucial support levels.&nbsp;

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Buy, Sell or Hold: What should investors do with Asian Paints, IRCTC and Dr Reddy’s Laboratories?

Ruchit Jain, Lead Research, 5paisa said that India VIX is still high around 28 which needs to cool off below 24 again for some stability.

In an interview with Zeebiz's Kshitij Anand, Jain said that for the coming week, supports for Nifty are placed around 16000 and 15700 while 16500 and 16800 are resistances. Edited Excerpts –

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Q) Benchmark indices shed more than 2% in the week gone by. What led to the price action on D-Street?

A) We witnessed some roller coaster rides during the week with the index giving moves on both sides in a wide range.&nbsp;&nbsp;

The stronger hands (FII’s) have continued their selling streak in the equities and in the derivatives segment too they formed bearish positions.

The negative news flows from the global geopolitical developments had a major impact on our markets and hence, we witnessed such corrections during the week.

Q) How should investors prepare themselves for the coming week. What are the key levels that one should track for the coming week on Nifty and NiftyBank?

A) The undertone remains bearish as the previous support of 16,800 has now acted as a resistance. The ‘Lower Top Lower Bottom’ structure continues on the daily time frame charts and the momentum oscillators to are pointing out weak momentum.

The India VIX is still high around 28 which needs to cool off below 24 again for some stability.

For the coming week, supports for Nifty are placed around 16000 and 15700 while 16500 and 16800 are resistances.

The supports for Bank Nifty are placed around 34000 and 33580 while resistances are seen around 35000 and 35500.

Q) Sectorally, auto, banks plunged the most. What led to the price action and do you think the pressure could continue in the coming week as well?

A) The banking space was corrected due to the formation of short positions in the derivatives segment. Bank Nifty as well the index heavyweights saw a fall in prices along with a rise in the open interest which led to such sharp correction.

Till the market momentum remains negative, this space is likely to continue its underperformance. However, given that prices have already seen a decent correction from the highs, the risk-reward is not much favorable for fresh shorts and hence traders should be very selective in trades.

The Auto space reacted primarily to the weak sales numbers that we announced at the start of the month. Also, rising commodity and crude prices have a negative impact as it increases cost and reduces demand for their products. Hence, we saw selling pressure in this sector which could continue in the near term.

Q) India VIX above 29. What does it suggest? Should investors brace for more volatility? What does the history suggest?

A) When India rises above 22-24 zone it has always been signs of higher volatility and uncertainty for equity markets. VIX is still at a higher level which does not augur well for the market. It needs to cool off below 24 for some stability.

Q) What should investors do with small &amp; midcap stocks? Time to buy or time to exit high beta, high PE stocks? What are your views?

A) Market participants are always attracted towards the mid-cap and small-cap space during uptrends but when markets correct, these spaces tend to provide deeper price-wise correction, and hence, investors then stay out due to fear.

Given that volatility is high, we may see further correction in the near term. The major support for the Nifty Midcap100 index is placed in the range of 25500-26000 and when the index comes in that range, one should start taking contra trades for their portfolio.

Q) Any top 3-5 stocks that traders can look at for the March series?

A) Here are a few trading ideas for the March series:

Bajaj Finance: Sell| Target Rs 6300| Stop Loss Rs 6725

We expect some further correction in the financial space and Bajaj Finance within this sector looks weak as the stock has breached its 200 DMA.

One can look to short Bajaj Finance in the range of 6570-6590 with a stop loss above 6725 for a probable target of 6300.

ITC: Buy| Target Rs 250| Stop Loss Rs 210

On the positive side, ITC has bucked this falling trend and has witnessed buying interest during the week.

The price up move is supported by good volumes and hence, one looks to buy the stock in the range of 225-220 with a stop loss below 210 for a probable target of Rs. 250.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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Ruchit Jain, Lead Research, 5paisa said that India VIX is still high around 28 which needs to cool off below 24 again for some stability.

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Strong support for Nifty placed at 16,000; ITC remains top buy for March series: Ruchit Jain of 5paisa

Sandeep Matta, Founder, TRADEIT, Investment Advisor,&nbsp;advises traders to refrain from any naked position and use derivative options as a strategic trading tool while long-term investors can start accumulating quality businesses on an SIP basis.

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In an interview with Zeebiz's Kshitij Anand, Matta said that investors and traders should remain cautious and must do proper risk management in this testing time. Edited Excerpts –

Q) Benchmark indices shed more than 2% in the week gone by. What led to the price action on D-Street?

A) Past week was challenging for stock markets where the Nifty50 dropped by about ~3% while the Bank Nifty shed over 5 per cent.

Factors such as geopolitical tension between Russia-Ukraine, the surge in commodity prices, currency weakening, higher inflation, as well as fear of a US Fed rate hike ignited negative prices action in equity markets.

Q) How should investors prepare themselves for the coming week. What are the key levels that one should track for the coming week on Nifty and NiftyBank?

A) Investors and traders should remain cautious and must do proper risk management in this testing time.

Benchmark indices are giving wild moves on either side daily and maintaining stop loss on trades will be challenging due to higher VIX.

We advise traders to refrain from any naked position and use derivative options as a strategic trading tool while long-term investors can start accumulating quality businesses on a SIP basis.

Weekly Key levels for Nifty 
Buy Zone Above – 16400 for the target of 16663-17080 
Sell Zone Below – 16060 for the target of 15716-15505

Weekly Key levels for Bank Nifty 
Buy Zone Above – 34950 for the target of 35754-37100 
Sell Zone Below – 34000 for the target of 33478-32700

Q) Sectorally, auto, banks plunged the most. What led to the price action and do you think the pressure could continue in the coming week as well?

A) Banks and Automobile sectors are the lifeline of any economy and are FIIs favourite. In the past few months, FIIs are the net seller, and their selling volume is intensifying every week which leads to negative price.

There is action in banks and automobile sectors. Price pressure is likely to continue due to factors such as geopolitical tensions, fed rate hike, increasing inflation, year-end NAV adjustments, etc.; however, the rate of fall may decline, and any positive development will bring a swift uptick on these counters.

Q) India VIX above 29. What does it suggest? Should investors brace for more volatility? What does the history suggest?

A) VIX which is also known as the fear index is currently trading between 28-30 and is likely to peak out between 33-35. Bottom formation for the market can also be expected at that level.

Volatility is likely to continue until VIX starts trading below 20. Historically, during unexpected events such as Covid, 2008 recession, etc. -- VIX has surged to 85, and markets bottomed out and that triggered a strong rebound from those levels.

Q) What should investors do with small &amp; midcap stocks? Time to buy or time to exit high beta, high PE stocks? What are your views?

A) Small and mid-cap stocks have always found a sweet spot in the retailer's heart, majorly due to their lower ticket size. However, during the recovery phase, the rate of price action is always delayed compared to large-cap counters.

We advise investors to assess the fundamentals of these stocks and try to reshuffle the existing portfolio a bit. The market is filling the valuation gap and many large-cap counters have corrected and are available on fair valuation therefore new investment should be in good quality stocks only.

Q) Any top 3-5 stocks that traders can look at for the March series?

A) Markets will continue to remain volatile and therefore investment approach will be more rewarding than the trading approach.

UltraTech, Maruti Suzuki, DLF, Balaji Amines, SBI, and Gujarat Gas are on our favourite list and may outperform the market in March Series.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

Sandeep Matta, Founder, TRADEIT Investment Advisor advises traders to refrain from any naked position and use derivative options as a strategic trading tool while long-term investors can start accumulating quality businesses on an SIP basis.

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Use derivative options and refrain from any naked position amid volatility in markets: Sandeep Matta of TRADEIT Investment Advisor

The most important principle to ward off the discomfort from market volatility is to ensure that the portfolio is invested into companies that are thoroughly researched and have the potential for above-average growth. Once this aspect of selection is done diligently there is little to worry about the portfolio because the assurance of performance is there in the process of selection itself, Dr. Joseph Thomas, Head of Research at Emkay Wealth Management said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts: 
 
Q) Though the Budget 2022 has largely been stable, the ongoing geopolitical events have fueled risk-off sentiment in the stock markets. How should long-term investors view this? 
 
A) The Budget statement was positive and brought some cheers to the markets. It had a lot of substance in terms of some of the basic proposals that it presented for long term growth. 
 
The budget offers continuity on the proposals and reforms instituted in the earlier budgets and provides a direction. The accent on infrastructure, the extension and expansion of the PLI scheme, earmarked share for private sector in defence production and research, provision for affordable housing are some of the things that are positive for the economy.

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While these benefits may accrue to the economy over the coming few years, there is definitely headwinds like the liquidity normalization in all major economies including the US and India, high levels of inflation, and rising market yields. &nbsp; 
 
The process of normalization of liquidity, and the rise in money market yields is gradually bringing in normalization of returns from equity. This normalization has brought down the returns across market caps and sectors. 
 
In many different waves of downward movements, since the last three months, the equity market has been correcting downwards offering opportunities for investors to commit to the markets afresh, and benefit from the phased or systematic investments. 
 
It is also important not to get carried away or taken aback by the volatility in the markets. This is because if one has a portfolio of well researched and carefully chosen stocks of growth companies, over longer time periods, the portfolio is bound to perform well. 
 
That is the case with well managed funds with a track record of consistent performance. There has been continuous and persistent exit by foreign investors from the domestic market. 
 
These exits result from mainly factors that are related to the US economy, and with US economic growth is well in place, and US inflation at high levels, the yields have started rising. 
 
Q) Why are FIIs cashing out from Indian markets?

A) The US Fed is about to complete the accelerated winding up of the bond buying program, and a rate hike is likely very soon. The liquidity glut which was caused by the monetary expansion is coming to an end, and some of these funds which were sheltered in emerging markets are back the country of origin. The same phenomenon was witnessed last time around during the tapering of the quantitative easing. &nbsp; 
 
Q) What about high PE stocks? 
 
A) There is yet another reason for the general weakness in equities. When inflation moves up, it becomes difficult to sustain high P/Es, and when inflation sustains above a certain level, like 3.00 % to 3.50% in the case of US, a contraction of market capitalisation happens. 
 
This has been proved by data of the last three decades. It may also be pointed out here that the fiscal consolidation path and the enhanced borrowing program, outlined in the Union Budget, have not been looked at with favour by some of the international rating agencies. 
 
Q) What is your take on the December quarter earnings and what is the kind of projections you foresee for FY23? 
 
A) The net sales growth in BSE 500 companies has been encouraging, with all major sectors excluding auto components and ancillaries display a positive, high double-digit growth. 
 
The top sectors were consumer goods, IT services, chemicals and fertilizers, metals and mining and oil and gas, while real estate, telecommunications, pharmaceuticals, cement etc. have low rates of growth, in the high single digit level. 
 
Factors that would be of relevance in the coming days from the perspective of earnings would be the rate of GDP growth, the pick -up in demand especially retail demand, the level of moderation in inflation especially commodities including metals etc. 
 
An acceleration of the rate of economic growth is probably the most important factor that could scaffold earnings growth. Much would depend on the easing of inflationary pressures and the availability of credit. Given the volatility in the markets, and the normalization of liquidity, any corrective downward movements may be made use of as opportunities to make long term investments in equities.

It is equally important that portfolios which have a good track record of delivery of performance should be invested into. The stock selection which the portfolio managers make will assume greater importance as the market realigns itself to the new realities of growth and earnings. The appropriate mode to invest will be a phased approach or systematic investment plans. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 
 
Q) Last two months have been volatile how have you positioned your portfolio to tackle volatility amid external headwinds?

A) The most important principle to ward off the discomfort from market volatility is to ensure that the portfolio is invested into companies that are thoroughly researched and have the potential for above-average growth. Once this aspect of selection is done diligently there is little to worry about the portfolio because the assurance of performance is there in the process of selection itself to a significant extent.

Periodic portfolio reviews, booking of some profits occasionally, and also utilizing the cash available to accumulate stocks that become cheaper, would also add strength to the portfolio. At peak portfolio returns, it becomes amply clear that abnormal returns may not be sustainable, and hence brining in a blended approach to the portfolio with a combination of growth plus some amount of value, that is, a moderately blended strategy will help in protecting the value of the portfolio on a relative basis, that is, in relation to the benchmark.

Exposure to overseas equity is also a mechanism by which a certain kind of hedge is created against the depreciation in the local currency, for those who may be wanting to spend in foreign currency in future for various purposes. But this should be carefully done, as the probability of overseas returns should be theoretically much higher than the prospects of local returns in future for overseas investments to make sense. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 
 
Q) Inflation might certainly become a pain point for the economy as well as RBI – what trajectory you foresee for rate in next 12 months. How should investors position themselves to tackle the change? 
 
A) The pressures on account of high inflation or price level is bound to be there in the first half of this calendar year. Oil prices have been moving up as a result of the demand picking up to the pre-pandemic levels, and the limited capacity for output and supply expansion by OPEC+. The main reason for domestic price level would be fuel prices emanating from high prices of oil in the global markets.

The Russian invasion of Ukraine has paved the way for sustained high prices for a longer period of time. Much would depend on how this conflict develops and how prolonged it would be. The inflation based on CPI was a shade above 6 % last month, and it may well stay there or move higher in the next two months. Inflation is very high in the US, UK and Europe too, and policy responses may come through in the next few weeks. Market rates and yields have moved up already, both in India and abroad. Market rates have moved up since the last two to three months.

Therefore, any action from the RBI may not be of any direct consequence as such. Also, in the last policy statement the RBI has indicated that an accommodative stance will be followed for a prolonged period of time, that is, till growth becomes sustainable. Investors in debt funds should focus more on very short end of the curve or short-term funds till we see the yields stabilising at higher levels.

Rates are bound to rise not just because of inflation but more importantly from the limited space available for primary gilt issues as the quantum of borrowing is large. Those who are at the short end but more tilted towards the mid segment, may continue to hold the positions.

This is possible as the accruals may be high in some of these funds, and the portfolio maturities may ensure that around 20 % to 30 % of the portfolio gets reinvested on maturity at the ongoing yields. It is also possible that there may be bonds at attractive yields available for purchase and such opportunities may be encashed for holding till one year or two years. So, the rates are set to rise, and it is prudent to stay at the short end. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 
 
Q) Small &amp; midcaps have clearly outperformed in the past 2 years with handsome margin – how should investors view the space in FY23? 
 
A) Yes, both these segments have performed well in the last couple of years. But if you look at the returns as of today, it is quite evident that returns have normalized, with normalization of liquidity and the likely rise in interest rates. I must add here that even the large cap space has the returns normalized over the last few months. Something that must be borne in mind is that when it comes to expansion of market capitalization or growth, there is greater consistency in the performance of large caps, and a much lesser consistency in the mid cap space, and probably only occasional spurts of performance in small caps.

Therefore, in any portfolio allocation, a major component of the allocation should be to large caps, followed by mid- caps and blended strategies. While one may go with small cap funds from the mutual fund space, you should also look at the Alternate Investment Funds (AIFs) which focus on investments in the small cap space. AIFs, since they are for fixed periods, and mostly for three or four years, the fund manager will be under no pressure on a day-to-day basis, and he will be able to make studied choices which are likely to work out well over longer investment horizons.

This unique opportunity offered by AIFs is something that deserves active consideration.&nbsp; It can be safely ruled out that the kind of returns seen in the last two years may not be probable this time around, and the approach to investments should be in a graduated fashion or phased manner. &nbsp; &nbsp; &nbsp; 
 
Q) If someone is running a portfolio with deep red – what should be his/her strategy before the financial year-end. Hold positions or exit stocks. If exit, then which stocks/fund should the investors' exit from? 
 
A) This is a very personalized thing, and recommendations on exit, entry or hold may differ from portfolio to portfolio, and also with reference to specific stocks. Fundamentally price performance should be looked at as the first criterion to understand the portfolio. As a senior equity research analyst, myself, I may be looking at trimming portfolio size in case of large number of holdings, and insignificant holdings. Usually, the tail end of the portfolio adds very little to performance, and often becomes a drag on performance.

It is also important that all bad apples are eliminated because they have the capacity to contaminate the entire basket of stocks. One needs to take cognizance of stocks that will provide growth and with it returns. This approach to selection becomes more important as net selectivity would decide the extra returns that you may be able to generate when benchmarked against the index.&nbsp;

Also, in any portfolio we need to bring in not only diversity in terms of sectors and market caps, but also in terms of the fund management styles, and all of this one may be able to realize by choosing a combination of direct stocks, Mutual Fund Equity Schemes, PMS and AIFs. But I may reiterate here that this review is a portfolio specific thing and should be looked at from the individual’s risk appetite and risk preferences. &nbsp; &nbsp; &nbsp;

Q) FIIs clearly remain net sellers but retail investor force is something that is keeping market float at every support. How do you see FII activity in near future?&nbsp; There is a saying that when FIIs exit – it is usually the best time to book profits?

The FII activity that we have seen so far in the last few months is likely to continue like that into the near future. They have their own reasons for their actions, and these are factors which are mainly US-centric. The exits result from mainly factors that are related to the US economy, and with US economic growth well in place, and US inflation at high levels, the yields have started rising. The Fed is about to complete the accelerated winding up of the bond buying program, and a rate hike is likely very soon.

As I had indicated earlier, the liquidity glut which was caused by the monetary expansion is coming to a close, and some of these funds which were sheltered in emerging markets are back the country of origin. The same phenomenon was witnessed last time around during the tapering of the quantitative easing last time around too. There is yet another reason for the general weakness in equities and that is sustained inflation.

But the most interesting aspect of markets is that the retail investors through SIPs are putting into the market in toto amounts upwards of Rs.10,000 Crs, month after month, which actually counters the effect of exit by FIIs to some extent. Thing will start turning around with the liquidity normalisation coming to an end, and the upward rate cycle getting kindled. &nbsp; &nbsp; 
 
Q) The recent selling was largely seen in high PE s tocks which low PE stocks did not see much sell-off. Can we say that smart money is now moving out of high beta counters and richly prices stocks? 
 
A) See, these are linked to the investment styles and preferences which tend to evolve or move with time. Stocks even at high P/E, and high P/E stocks have a justification in terms of their supply demand positioning, and at some pint of time when price saturation happens, comes the sell off. The reasons that may be quoted for the selling may be many and varied. In case of anticipated volatility or price saturation, it is only natural that high beta stocks may be exited. These are all aspects of the strategies that are generally followed in entering or exiting markets. &nbsp; &nbsp; &nbsp; 
 
Q) Govt has notified the first phase of the green hydrogen policy. What does it mean for markets and which companies are likely to get benefited the most? Also, does that mean that companies with high ESG ratings will be considered for investment by foreign funds? 
 
A) The green hydrogen policy is consistent with the objective of net zero carbon emission to be achieved by all the countries of the world, and policy towards this has been announced by all major countries, about thirty of them. This is nothing but a drive towards de-carbonization of the environment and a technology that is critical for us. But the benefits of this environmentally as also commercially will accrue only over a longer time frame.

The total investments required for this is estimated at US $ 5 trillion.&nbsp; From this you can make out the kind of size and scale that is envisaged. Some of the major industrial groups have already put out their intentions to be part of this. There is an existing hydrogen market like steel, refineries, chemicals etc. but it has scope in many other fields like aviation, shipping, power generation etc. At this juncture green hydrogen projects are mainly announced for Europe, Australia, Middle East and to some extent South America.

Ad decarbonization starts happening green hydrogen projects will start having their feet firmer, but the revolution is certainly going to happen. ESG norm in investing is already in place, and in India too special funds which follow this norm have also been launched. It will become more relevant as years pass by, and the ESG ratings of companies will be looked at more often. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 
 
(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

"Fundamentally price performance should be looked at as the first criterion to understand the portfolio. As a senior equity research analyst, myself, I may be looking at trimming portfolio size in case of large number of holdings, and insignificant holdings,"&nbsp;Dr. Joseph Thomas


Dalal Street Voice: Invest in thoroughly researched companies to ward off market volatility woes: Dr. Joseph Thomas of Emkay Wealth Management

Indian market closed lower on Thursday pushing benchmark indices towards crucial support levels. The S&amp;P BSE Sensex fell more than 300 points while the Nifty50 closed below 16500 levels. 
 
Sectorally, selling pressure was seen in realty, consumer discretionary, banks, capital goods, consumer durables, and finance.

Stocks that were in focus include HPCL which closed 4 per cent higher, GMDC rallied more than 13 per cent, and India Glycol closed with gains of over 7 per cent on Thursday. 
 
Here's what Mazhar Mohammad, Chief Strategist – Technical Research and Trading Advisory, Chartviewindia.in, recommends investors should do with these stocks when the market resumes trading today: 
 
HPCL: Buy 
 
There seems to be a trading bottom around 260 levels after witnessing a steep correction from the highs of 355 levels registered last November. 
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Moreover, after forming a recent low of 263 levels, this counter retraced almost 80% of the entire rally from the lows of 244 to 354 levels. 
 
Hence, if the stock sustains above 260 levels, then it can head higher towards 307 levels. A stop-loss suggested for the trade is a close below 268 levels. Even fresh buying also can also be considered. 
 
GMDC: Buy 
 
This counter seems to have registered a consolidation breakout on huge volumes, after witnessing a range-bound move for a couple of weeks. 
 
Hence, if the stock sustains above the intraday low of 140 levels, then it should head higher to test the interim top-placed around 180 levels. 
 
Therefore, positional traders can look to buy now and should prepare to add on a dip into the zone of 150 – 145 levels. A stop-loss suggested for the trade is a close below 140 levels. &nbsp; 
 
India Glycol: Buy 
 
A sharp upsurge in the price of this counter on the back of relatively higher volumes is hinting that it is on a pullback mode from the recent lows of 726 levels. Hence, sustaining above 770 levels, the strength shall initially extend into the zone of 863 – 882 levels. 
 
Therefore, positional traders are advised to adopt a two-pronged strategy of buying now and adding on dips in the zone of 800 – 785 levels and look for a target of 880. Stop suggested for the trade is a close below 770. &nbsp; 
 
(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

&nbsp;

Indian market closed lower on Thursday pushing benchmark indices towards crucial support levels.&nbsp;


Buy, Sell or Hold: What should investors do with HPCL, GMDC and India Glycol?

Indian market bounced back in morning trade on Thursday after falling over 1 per cent in the previous trading session. 
 
Sectorally, the action was seen in power, utilities, oil &amp; gas, infra, and IT in intraday trade on Thursday.

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Stocks that were in focus include Maruti Suzuki that closed with losses of over 6 per cent, HDFC Ltd fell nearly 4 per cent and Dr Reddy’s Laboratories was down more than 5 per cent on Wednesday. 
 
Here's what Santosh Meena, Head of Research, Swastika Investmart Ltd, recommends investors should do with these stocks when the market resumes trading today: 
 
Maruti Suzuki: Buy 
 
The counter has witnessed a breakdown from the Head &amp; Shoulder pattern formation on the daily chart, but the overall structure looks lucrative as it trades above its 100, 200-Days SMA moving averages. 
 
The stock has strong demand zone near Rs 7,750. On the upside, 8350 is an immediate resistance area, and above this, we can expect a run-up towards 8500+ levels in the near term. 
 
On the downside, if it will break 7750 level then 7500 is the next critical zone. 
 
HDFC Ltd: Avoid 
 
The counter is forming down sloping channel formation and it has also given a breakdown from the horizontal line around 2350 level. 
 
The overall structure is looking weak as it trades below its all-important moving averages; however, it is having a demand zone near 2170. 
 
On the upside, 2350 has become an immediate resistance area, and above this, we can expect a run-up towards 2500+ levels in the near term. 
 
On the downside, if it breaks the 2170 level then 2000 is the next support level. 
 
Dr Reddy’s Laboratories: 
 
The counter has witnessed a breakdown from the Head &amp; Shoulder pattern formation on the weekly chart. The overall structure is distorted as it trades below its all-important moving averages however it is having a demand zone near 3600. 
 
On the upside, 4000 is an immediate susceptible area; above this, we can expect a run-up towards 4200+ levels in the near term. 
 
(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

Stocks that were in focus include Maruti Suzuki that closed with losses of over 6 per cent, HDFC Ltd fell nearly 4 per cent and Dr Reddy’s Laboratories was down more than 5 per cent on Wednesday


Buy, Sell or Hold: What should investors do with Maruti Suzuki, HDFC and Dr Reddy’s Laboratories?

Mayuresh Joshi, Head of Equity Research, William O'Neil India believes that the uncertainties on a macro scale across the globe mean that the adjustment shall continue from risk-on assets like equities towards safer haven assets to adjust the overall weights on FII Books.

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Mayuresh has worked as a financial analyst, investment banker, wealth manager, and portfolio manager for 16+ years and has extensive experience in the fields of investment banking, strategic alliances, business development, wealth and portfolio management.

In an interview with Zeebiz's Kshitij Anand, Joshi said that sectors, where earnings resilience is holding as of date are Capital Goods/Construction Equipment, Autos, while IT/financials/metals are showing some signs of consolidation. Edited Excerpts –

Q) Geopolitical events as well as expectations of solid tightening by the US Fed, have certainly fuelled a risk-off sentiment in the market. What is your take, and how should long-term investors view this?

A) Markets are gestating implications of this global news cocktail and corresponding consequences of waning global GDP growth, reducing the risk premium that equities markets enjoy.

The excesses that the markets were building in are now getting simmered down to more realistic assumptions.

The premise of sectoral rotation is focused on sectors that are expected to show earnings resilience is gaining strength.

The volatility associated with these events should settle down over the next few weeks. As the markets enter into a time correction phase, specific sectors exhibiting earnings resilience should be kept on the radar.

Q) What is your take on the December quarter earnings and what is the kind of projections you foresee for FY23?

A) December earnings have been decent though the strong underlying for most industries was the input cost inflation eating into the operating performance.

For FY23, the markets should deliver earnings growth in the range of 14-15%. But, due to input inflationary/supply chain pressures, operating performance might be muted in the first half with some optimism of recovery towards the second half.

Q) Last two months have been volatile how have you positioned your portfolio to tackle volatility amid external headwinds?

A) We have been extremely light over the past few weeks as evident signs of distribution occurring across diversified sectors and the broader markets are pointing to a clear sectoral rotation from high flying sectors to sectors where earnings shall be consistent.

The volatility in the past few weeks and our observations on the same are listed below:

a) With 57% of stocks below 50-DMA and 38% below 200-DMA, it is evident that technical damage is deep.&nbsp; It won't be easy to repair this damage, and the market might need some time to do it.&nbsp;&nbsp;

b) Relative strength has been feeble. Only 23% of stocks have relative strength of 50 or higher, indicating poor relative price performance.&nbsp;&nbsp; 
&nbsp; 
In lieu of those mentioned above, wait for the market to show some strength.

Let the leading stocks/sectors reclaim key moving averages and multiple ideas to break out from early-stage bases, along with improvement in relative strength.&nbsp;&nbsp;

Q) Inflation might certainly become a pain point for the economy as well as RBI – what trajectory do you foresee for the rate in the next 12 months. How should investors position themselves to tackle the change?

A) RBI has projected a 4.5% rate for the next financial year. Now, external headwinds are more or less due to concerns about imported inflation and how the crude prices might move and ultimately settle down.

Food inflation with expectations of a record RABI output would ensure that the overall inflation basket, esp. CPI inflation should be contained through inflationary pressures from crude.

Its second-round effects on higher transportation/logistic costs and input costs of crude derivatives moving higher might be an outside risk. Therefore, if inflation pressures persist contrary to RBI expectations, what stance would it take then.

Though data is still evolving, it should not be sticky, leading to structural issues. Even if we witness imported inflationary concerns, RBI moves on liquidity management, and any interest rate tightening would not be in the same trajectory as the developed world.

A worst-case scenario might be a 50bps hike in the current financial year with the Central Bank using other tools at its behest to curb excess liquidity prevalent in the system.

Q) Small &amp; midcaps have clearly outperformed in the past 2 years with handsome margins – how should investors view the space in FY23?

A) Small/Mid caps outperformance as the market turns results in major corrections as these spaces are where exits happen in the first and fastest mode. We believe that one has to be highly selective in both these spaces.

Q) If someone is running a portfolio with deep red – what should be his/her strategy before the financial year-end. Hold positions or exit stocks. If exit then which stocks/fund should the investors exit from?

A) The first step is to see the positioning and weightage that one holds in specific sectors/stocks. The market is now transitioning from a period of tremendous liquidity-feeding runaway growth to a scenario of liquidity being clawed back/inflationary concerns emerging and Global GDP growth waning, leading to more realistic earnings growth across sectors.

Sectors, where earnings resilience is holding as of date are Capital Goods/Construction Equipment, Autos, while IT/financials/metals are showing some signs of consolidation.

In our view, the relative strength of FMCG/Realty/Pharma indices is slipping into the underperforming quadrant.

Q) FIIs clearly remain net sellers but retail investor force is something that is keeping market float at every support. How do you see FII activity in the near future? There is a saying that when FIIs exit – it is usually the best time to book profits?

A) FII's have been adjusting their flows vis-a-vis how the global markets are behaving and a precise adjustment towards dollar-denominated assets, adjusted for ETF flows which benchmark against these indices and weightage that emerging markets carry in their comprehensive book.

The uncertainties on a macro scale across the globe mean that the adjustment shall continue from risk-on assets like equities towards safer haven assets to adjust the overall weights on FII Books. However, they shall be selective in sectoral allocations.

Albeit, Domestic Institutions/SIP flows have remained extremely strong, offsetting supply pressures from FII's to a large extent, and that should continue providing resilience and support for our markets.&nbsp;&nbsp;

Q) The recent selling was largely seen in high PE stocks which low PE stocks did not see much sell-off. Can we say that smart money is now moving out of high beta counters and richly priced stocks?

A) It has been evident that money has moved from high-value PE stocks towards value. When markets readjust their earnings trajectory, and some sectors hold strong earnings momentum vis-a-vis global macro/local macro/micro news flow, capital flow and readjustments shall be natural phenomena.

Also, as normalized returns can be expected from the overall markets, high PE stocks generally lose flavour. Their valuation stack upstarts look unattractive for the sheer inability to maintain excessive earnings growth as witnessed in the previous cycle.

So, to put in a gist, our take at MarketSmith India is that post a corrective phase like the one we are witnessing right now brings about a Leadership change with new sectoral leaders and their leading stocks expected to emerge as potential winners in the next cycle.

Q) Govt has notified the first phase of the green hydrogen policy. What does it mean for markets and which companies are likely to get benefited the most? Also, does that mean that companies with high ESG ratings will be considered for investment by foreign funds?

A) It is a proactive step and reform process that the Government has initiated. The objective is well laid out.

The capital investments as envisaged/planned should ensure that India becomes a self-sufficient hub for consumption of the same but an equal amount of export opportunities emerging from the same.

Companies foraying into the same shall focus on ESG funds as renewable, and companies reducing carbon footprint shall remain high on their rankings.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

In an interview with Zeebiz's Kshitij Anand, Joshi said that sectors, where earnings resilience is holding as of date are Capital Goods/Construction Equipment, Autos, while IT/financials/metals are showing some signs of consolidation.


Dalal Street Voice: Sectors expected to show earnings resilience are gaining strength: Mayuresh Joshi of William O'Neil India

Indian market closed in the green for the second day in a row on Monday. The S&amp;P BSE Sensex rallied nearly 400 points while the Nifty50 closed just a shade below 16800.

Sectoral buying was seen in sectors including metals, energy, oil &amp; gas, utilities, and consumer durables while selling was seen in autos, banks and finance stocks.

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Stocks that were in focus include Hindalco which closed with gains of over 7 per cent, GAIL India Ltd also rallied 7.4 per cent and Fine Organic Industries pared gains after hitting 52-week high to close flat on Monday.

Here's what Jatin Gohil, Technical Analyst at Reliance Securities, recommends investors should do with these stocks when the market resumes trading today:

Hindalco: Buy on dips | Target: Rs700 | Time Duration: 1-2 Months

Continuing its prior daily up-trend, the stock recorded a new lifetime-high of Rs 580. Major moving averages are sloping upwards, and its key technical indicators are positively poised.

The stock has the potential to keep exploring uncharted territory, which could lead it towards Rs 650 initially and Rs 700 subsequently.

In case of any decline, the stock will find support around the Rs 520-510 zone. A fresh long position can be initiated at the current juncture and on dips towards Rs 555-540.

Gail India: Buy above 151 | Target: Rs170 | Time Duration: 4-6 Weeks

The stock reversed before testing its short-term support zone (placed around Rs 125) and rose to 3-week closing high thereafter.

Its key technical indicators are in favor of the bulls. On the higher side, the stock will face a minor hurdle around Rs 148-151 zone.

A stable move above that zone could take the stock towards Rs163 initially and Rs170 subsequently.

Fine Organic Industries: Buy on dips | Target: Rs 5,000 | Time Duration: 2-3 Months

Since September 2o21, the stock remained upbeat and closed month on a positive note.

In the last month, the stock remained in favor of bulls and reported a gain of 10%.

As per the current setup, further, up-move cannot be ruled out.

On the higher side, the stock will face a hurdle around its psychological resistance of Rs 5,000. In case of any decline, the stock will find support between Rs3,650 and Rs3,500.

A fresh long position can be initiated at the current juncture and on dips towards Rs4,100-3,900.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

Sectoral buying was seen in sectors including metals, energy, oil &amp; gas, utilities, and consumer durables while selling was seen in autos, banks and finance stocks.


Buy, Sell or Hold: What should investors do with Hindalco, Gail India and Fine Organic?

Timken India Ltd stock has rallied 60 percent in a year compared to 15 percent upside seen in the Nifty50 in the same period.

The stock of this engineered bearings, mechanical power transmission products company has shown resilience in the recent selloff. Timken India is up nearly 3 percent in last week and over 3.4 percent in last month compared to 2.4 and 1.8 percent percent fall in Nifty50 in the same period.

Timken India Limited (Timken) was incorporated in 1987 as Tata Timken Limited (TTL), a joint venture between Tata Iron and Steel Company (TISCO) and The Timken Company of USA, a world leader in tapered roller bearings.

It provides roller bearings which are used in locomotives, engines, wagons, passenger coaches and wheels, company data showed.

Timken India is a low beta of 0.5 (1-year) which helps it to beat market volatility and is trading well above crucial short- and long-term moving averages. The stock is trading above 30,50,100 and 200-DMA which is a positive sign.

Investors can look at buying the stock on dips as the momentum could well take Timken India towards Rs 2700 which translates into an upside of over 30 percent from Rs 2026 recorded on 28 February, suggest experts.

The company with a market capitalization of more than Rs 15000 cr hit a 52-week high of Rs 2174 on 3 December 2021 and since then the trend went sideways.

In terms of shareholding, foreign investors reduced their stake while fund managers increased their stake in Timken India for the quarter ended December.

Foreign institutional investors (FIIs) decreased holding from 2.8 percent in the September quarter to 2.66 percent recorded for the quarter ended December.

Mutual Funds increased holding from 11.65 per cent in September quarter to 12.67 per cent recorded for the quarter ended December, data from Trendlyne showed.

<img alt="image" src="https://i.ibb.co/Dz7QF00/image.png" />

The recent price action in February pushed the stock above the crucial short-term moving averages of 30 and 50-DMA last week which suggests momentum is here to stay. The stock closed above 100-DMA for the first time on 15 February, data from Trendlyne showed.

The stock price started its upward move from 650 (March 20) and made a high of Rs 2,175 in December 2021 accompanied by higher bottoms and higher top formations.

“Super trend turned positive since September 2020 till date. The stock always traded above averages and never breached the 52-week average,” Bharat Gala, President - Technical Research, Ventura Securities Ltd, said.

“Recently, the stock made a high of 2108 crossing the previous two weeks high. The ROC, ADX &amp; PVT indicators suggest a possible firm uptrend. The possible targets are 2700-2900-3200,” he said.

Gala further added that if the stock price corrects downwards the buy levels are (2045-1960)-1900- (1840-1790). Stop Loss to be observed in the trade is 1650.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

Timken India Ltd stock has rallied 60 per cent in a year compared to 15 per cent upside seen in the Nifty50 in the same period.


Technical Check: 60% in a year! This manufacturing company eyes fresh 52-week high in next 6 months; time to buy the dip?

Amit Gupta - Vice President and Fund Manager, ICICI Securities PMS believes that with the rising inflation trajectory it is better to focus more on large-caps.

In an interview with Zeebiz's Kshitij Anand, Gupta said that there are many large caps from the sectors like corporate linked banks, capital goods, telecom, energy which have not performed for the last many years and can start seeing good inflows.

Edited Excerpts –

Q) Geopolitical events as well as expectations of strong tightening by the US Fed, have certainly fuelled a risk-off sentiment. What is your take and how should long-term investor’s view this?

A) The US interest rate increase is almost a certainty given the sharp surge in inflation which is the highest in the last 40 years. In fact, the market has now started factoring 5 rate hikes in 2022 with a possibility of a 50bps rate hike in the March 15-16 meeting.

Historically, we have seen when US interest rates were increased, the major move in US bond yields had come before the event.

During the rate hike cycles, the bond yields don’t show the same uptrend. In 2004-2006 despite 4% rate hike, US bond yield moved up by only 39 bps and in 2016-2018, it moved up by only 90 bps despite a 2.25% rate hike. Thus, major market jitters are seen before the first-rate hike.

Q) What is your take on the December quarter earnings and what is the kind of projections you foresee for FY23?

A) Despite margin pressure, good volume growth was registered in Consumer discretionary segment. Also banking, IT and Energy have seen good revival in earnings.

In fact, Q3 was a seasonally weak quarter for IT companies but they posted good results with higher hiring which gives good earnings visibility.

The domestic earnings have shown remarkable growth with Nifty EPS moving from 430 to 735 within 2 years which is the reason of market resilience despite global headwinds. For FY23, EPS is expected to grow by 18%.

Q) Last two months have been volatile how have you positioned your portfolio to tackle volatility amid external headwinds?

A) When global headwinds are seen, it is always better to position the portfolio with domestic cyclicals. We have good allocation to banking and financial services along with Cement, Capital Goods and Telecom.

Banking NPAs have seen a sharp decline from 11.5% to 7.3% in the last 4 years. Now credit growth has also seen recovery from 5.5% to 8.2% in the last few quarters.

With 35% higher government capital expenditure expected in FY23, capital goods also may see good surge in order book.

Also, telecom stocks are on recovery path post the tariff hike of 20% seen in prepaid. ARPU’s have started moving higher in this space.

Q) Inflation might certainly become a pain point for the economy as well as RBI – what trajectory you foresee for the rate in the next 12 months. How should investors position themselves to tackle the change?

A) With the US rate hike seen quite near, rate hikes in India are also almost a certainty despite the dovish stand by RBI. Historically, the inflation in India used to be higher than the US by 250-300 bps.

Now, the trend is reversed as the economy is recovering post pandemic impact and a record-high stimulus is given by the US.

Indian bond yields have already reacted to a surge in the US bond yields and we believe they are factoring in the rate hike cycle going forward.

India's inflation has also moved higher to 6.01% from last year’s 4.06% in the same period. The higher crude prices may keep inflation sticky for sometime as geo-political issues have also cropped up.

Q) Small &amp; midcaps have clearly outperformed in the past 2 years with handsome margin – how should investors view the space in FY23?

A) We believe with rising inflation trajectory it is better to focus more on large caps. There are many large caps from the sectors like corporate linked banks, capital goods, telecom, energy which have not performed for the last many years and can start seeing good inflows. We may see more money flow into value space in FY23.

Q) If someone is running a portfolio with deep red – what should be his/her strategy before the financial year-end. Hold positions or exit stocks. If exit then which stocks/fund should the investors' exit from?

A) The sectors, which had seen a good run up have succumbed to profit-booking before the rate hike cycle. Sectors like Chemicals, Metals, IT, and consumers are going through this phase.

The volatility may persist for some more time and thus investors should be ready to utilise the opportunities coming because of recent jitters.

Quality stocks fall only for limited periods, which doesn’t happen too often. One should look for earnings growth in the stocks/sectors.

When the market will get stable, sharp upsides would be seen in the stocks posting higher than expected results.

Q) How do you see FII activity in near future considering FIIs clearly remain net sellers? There is a saying that when FIIs exit – it is usually the best time to book profits?

A) Volatility is rising due to the absence of FIIs buying. In FY22, FIIs net inflows have remained negative only. However, when we see the period from October 2020-March 2021, we had seen one of the best inflows of Rs 2 lakh cr by FIIs in Indian markets.

This was the time when Nifty moved above the last 4-5 years hurdle of 12000 and inched towards 15000. Thereafter the FII flows have almost dried out and they are waiting on the sidelines to see off the volatility before the first rate hike.

We have seen Nifty spending 6 months between 15000-16000 and now 5 months within 16000-18000. There may be more consolidation possible before the new highs are seen again.

Q) The recent selling was largely seen in high PE stocks which low PE stocks did not see much sell-off. Can we say that smart money is now moving out of high beta counters and richly priced stocks?

A) Markets discount the future earnings growth which is where sharp run-up is already seen. More consolidation is possible going ahead.

Money has been moving from richly valued sectors to value space. In fact, the P/E normalisation is seen in Nifty also in the last couple of quarters of consolidation.

Price-wise index is not going anywhere but corporate profitability as % of GDP has recovered from the lows of 1.6% (in March 2020) and recovered to 10-year highs.

It is expected to reach 4.5% in FY23. This is where the P/E multiples of 22x have been reduced to 20.4 in Indian markets which should be a sign of relief.

Q) Govt has notified the first phase of the green hydrogen policy. What does it mean for markets and which companies are likely to benefit the most? Does that also mean that companies with high ESG ratings will be considered for investment by foreign funds?

A) Yes, the Indian government has a larger vision to cut India’s dependency on fossil fuels and promote cleaner forms of energy. As part of the policy, the government will waive inter-state transmission charges for 25 years to manufacture green hydrogen and green ammonia.

Few companies like Reliance Industries are looking for major CAPEX in renewable energy of Rs. 75,000 cr. in coming 3 years. Other companies are also coming forward which should help them to gain a good ESG rating.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

In an interview with Zeebiz's Kshitij Anand, Gupta said that there are many large caps from the sectors like corporate linked banks, capital goods, telecom, energy which have not performed for the last many years and can start seeing good inflows.


Kshitij Anand