Domestic brokerage firm Emkay Global Financial Services has tweaked its 'Emkay Alpha Portfolio' (EAP) for the month of June as the EAP-Nifty fell 2.6 percent in May against a 3 percent drop in equity benchmark Nifty.
Emkay said the EAP performance was dragged down by its 'underweight' positions on HUL (up 5 percent) and ITC (up 4 percent), and its 'overweight' positions on Titan, SBI, GAIL, Gland and BPCL (down 6-11 percent).
Within the Nifty50, as many as 31 stocks were down in May, while 9 stocks gained over 5 percent, Emkay pointed out.
The brokerage firm has retained significant 'overweight' on banks, autos (OEMs, ancillaries), consumer discretionary, utilities and telecoms; terming them as its structural calls.
The brokerage firm said that in the near term, it sees headwinds from weakening global growth momentum, rate hikes in the US and Europe, and unceasing FPI outflows in India, because of which it has tactically increased allocation to consumers (by 125 bps) and pharma (+15bps) sectors, based on softening of input cost pressures and inexpensive valuations, respectively.
It has trimmed the weightage of IT services by 75bps and cement by 40bps in its large-cap model portfolio.
ICICI Bank, Maruti Suzuki, SBI, and Tata Motors are the stocks in Emkay's high-conviction list and the brokerage firm is 'overweight' on them.
Aditya Birla Fashion and Retail, Birlasoft, Escorts, Motherson Sumi Wiring, Varun Beverages and Westlife Development are the buys of Emaky Global from the mid and smallcap segments.
Emkay is 200 bps 'overweight' on banks and in the banking sector, the top 'overweight' positions in the Nifty-EAP are SBI, ICICI Bank and IndusInd Bank, followed by HDFC Bank and Axis Bank.
In the auto segment, the brokerage firm is 25bps 'overweight' against Nifty50 on Maruti, Tata Motors, Motherson, Mahindra & Mahindra and Hero MotoCorp, and 'neutral' on Bajaj and Eicher. Emkay is 125 bps 'overweight' on the auto sector.
Emkay is 25 bps 'overweight' on the IT sector which is 75 bps below its previous rating and in the sector, HCL Tech is the only overweight position now for Emkay. Infosys, Tech Mahindra and Wipro are now 'equal weight' against 25bps 'overweight' previously. TCS remains as 'equal weight'.
From the oil & gas sector, Emkay has removed GAIL from EAP and replaced BPCL with IOCL. Key calls are ONGC and IOCL, both 50bps overweight. RIL remains marginally underweight (-170bps) relative to its Nifty weight of 12.5 percent, Emkay said. The brokerage is 115bps 'underweight' on the sector.
In the cement sector, Emkay is now 40bps 'underweight' as it has removed Shree Cement from EAP. In the pharma sector, Emkay is a marginal 25bps 'overweight' on each of Cipla, DRL, Sun Pharma and Gland Pharma. Emkay is 40 bps 'overweight' on the pharma sector.
Emkay said it is 250bps 'underweight' on the consumer goods & retail sector and has further reduced its 'underweight' position on HUL by 75bps and ITC by 100bps.
"We also marginally reduce 'overweight' on Titan and United Breweries by 25bps each – tactically shifting our incremental stance toward staples. The top 'underweight' positions are Asian Paints, Nestle, HUL and ITC. Our top picks among consumer staples are Marico and Britannia. Overall, we remain constructive on the consumer discretionary names − Titan and UBBL among large-caps," said Emkay.
Disclaimer: The views and recommendations made above are those of the broking firm and not of MintGenie.