What to do with Zomato, Suzlon, Adani Energy and 3 other stocks? Aamar Deo of Angel One Decodes
Markets globally as well as domestically went into a tailspin last week, with the Japanese Nikkei tanking more than 12% on Monday, its worst performance since 1987. However, during the later half of the week, markets recovered, with Nifty ending the week down by 1.4% WoW. Dismal US Labour report along with US unemployment rate edging higher, to 4.3%, its highest level since October 2021, unravelling of the Japanese Yen Carry Trade & US recession fears impacted investor sentiments negatively. However, encouraging US Jobless claims data, released later in the week, helped markets gain some confidence, and a decline in the VIX. Going forward, markets shall continue to remain high on the volatility factor, given that there still are concerns with regards to the quantum of yen carry trade and ongoing Israel-Iran tensions. Hence, investors should ideally look at lightening their positions and for any fresh entry, adopt a cautious approach.
It was a tough week for Nifty which ended with declines with US recession worries looming over the markets. The difficult part is guessing the direction so how should one navigate in these circumstances? Overall, given that the current Nifty PE trades around the 22-23 mark, bodes well for the markets going forward but the key driver shall be consistency. But investors, nonetheless, need to adopt a cautious and prudent approach as global cues continue to remain mixed and geo-political tensions remain high, which have the potential to unnerve the investor sentiments, as we witnessed last week.
While we hear analysts say that they remain upbeat on banks but investors seem to think otherwise. Not just private banks but PSUs have been feeling the heat. What will be your advice to investors? Most of the banking stocks, be it the private or the PSU, have been feeling the heat, as correction in prices have been anywhere between 2% – 6% in the month of August, leave apart HDFC Bank, which gained 2% plus during the same period. Overall, investors remain upbeat on the banking space from a long-term perspective, but given concerns with regard to shifting consumer preference, credit growth has been outpacing deposit growth, which could lead to liquidity challenges in the future, posing a risk for banks in the short-term. Banks need to be coming up with more products and offerings for savers and investors, to bring them back to the banks as currently, the spectacular bull rally has whetted the appetite of the Indian investors. Investors need to review their risk appetite as well, as all types of financial instruments are not suited for all types of investors, like one shoe size doesn’t fit all.
Among the top gainers this week were Zomato, KFin Tech and Suzlon while SAIL, Adani Energy and RVNL were among major laggards. What should investors do with them? Despite overall market turmoil, some stocks stood their ground, and the likes of Zomato, KFIn Tech & Suzlon gained WoW around 2%, 25% and 7% respectively, while stocks such as SAIL, Adani Energy & RVNL witnessed sharp corrections, to the tune of 11.5%, 12.5% and 12% WoW, respectively. Investors can continue to hold Zomato from a long-term perspective, while they should look at booking part profit in both KFin Tech and Suzlon, given the sharp appreciation in the stock prices this year. As far as the losers are concerned, SAIL could find support around the 120-125 mark, but it appears that a major top has formed, with the stock very unlikely to retest it, in the near-term. A similar trend is witnessed in RVNL as well, hence investors should look at any probable bounce back as an exit opportunity, with RVNL having strong support around the 490 levels. Adani Energy, on the other hand, is clearly tied in a range, between 970-1250, hence investors can use these levels for deciding entry and exit strategy, as till such time, these levels in either direction are not taken out, the stock would continue to consolidate.
Both the Nifty FMCG & Nifty Pharma indices, ended in the green last week, with WoW gains of 0.67% and 1.40% respectively, reflecting the growing interest of investors in the defensives, post the heightened volatility in markets. It has mostly been observed that the smart money starts moving into the defensive and large caps during times of uncertainty.
Further, with expectations of revival in both urban and rural demand, it is expected that the FMCG sector could see better days ahead, also adding onto investor sentiments. The pharma sector has witnessed sharp revival in its fortunes over the past year, and with positive signals emanating from the US, is also helping pharma sector stocks outperform many other sectors.