The equity market may trade with a negative bias in the short-term, but the broader market will maintain its positive bias in the long-term, Vinod Nair of Geojit Financial Services says.
The market started off October on a negative note, with PMC Bank-HDIL fraud heightening concerns over asset quality and the RBI sharply lowering the growth forecast.
The benchmark indices gained around 4% each and broader markets (midcap and smallcap) added 5 % each in September, on the back of the corporate tax rate cut.
But, bulls were again trapped by bears with the benchmark indices losing 75 % of their September rally in the first week of October. On top of that, the Reserve Bank of India (RBI) lowered its FY20 GDP growth forecast to 6.1 from 6.9 %.
In addition, FIIs remained net sellers for the sixth consecutive month, suggesting they were in risk-off mode on account of the global slowdown and trade concerns. They have sold Rs 44,000 crore worth of shares since May, including last week’s Rs 3,200 crore worth of selling.
Experts see worries such as weak earnings and slowdown to persist for some more months before measures taken by the government begin showing results. Volatility is expected for some more time and all eyes will be on the September quarter earnings.
"Despite the cut in taxes and the government stimulus, the broad economy will take more time to gain and invest in new projects. Having said that, the worst for the domestic economy may be over by Q2–Q3 FY20. We can expect a faster recovery in consumption led by stability in the job market, festive seasons and reduction in interest cost. This quick benefit cannot be replicated in the non-consumer segment as the financial sector and new investments have a lag-effect," Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.
Nair said the equity market may trade with a negative bias in the short-term, but expects the broad market to maintain its positive bias in the long-term.
Experts advised using buy on dips strategy and pick quality stocks, as these would benefit in the medium-to-long term from several measures announced by the government and transmission of the repo rate cut, etc.
A list of 11 stocks that can deliver 10-57 % return:
Larsen & Toubro: Buy | Target: 1,800 Rs| Return: 26 %
Petronet LNG: Buy | Target: 336 Rs | Return: 31 %
Tech Mahindra: Buy | Target: 830 Rs| Return: 17 %
ICICI Bank: Buy | Target: 520 Rs| Return: 26 %
Zee Entertainment Enterprises: Buy | Target: 372 Rs | Return: 57 %
Ashok Leyland: Buy | Target: 84 Rs | Return: 23.5 %
Mahindra & Mahindra | Target: 620 Rs | Return: 10 %
Amara Raja Batteries: Buy | Target: 822 Rs| Return: 19 %
KEI Industries: Buy | Target: 613 Rs| Return: 15 %
BSE Limited: Buy | Target: 701 Rs| Return: 25 %
VA Tech Wabag: Buy | Target: 382 Rs| Return: 46 %
Our Best Ever Services - Stock Cash Tips
For Quick Trial – 62329-95233 |
or mail us here:info@thegrssolution.com
or visit www.thegrssolution.com
