Even as the Indian market has been witnessing strong bouts of volatility and even many largecap stocks with strong fundamentals are being pounded, some 10 stocks from Nifty 500 stocks have gained more than 10 percent in the last one month, data from Trendlyne showed.
Shares of Mangalore Refinery And Petrochemicals (up 48 percent), Adani Green Energy (up 26 percent), Shree Renuka Sugars (up 19 percent), NLC India (up 18 percent), Bharat Dynamics (up 17 percent), Gujarat Ambuja Exports (up 14 percent), Ambuja Cements (up 14 percent), Capri Global Capital (up 13 percent), NHPC (up 13 percent) and Adani Transmission (up 11 percent) have gained more than 10 percent in the Nifty 500 index, as per the latest data available with Trendlyne.
Equity benchmark Nifty50 is down about 8 percent in the last one month.
The market has been trading in the red since April 29 if we exclude the flat close of May 5 when the Nifty ended with a nominal gain of 0.03 percent.
Inflation Concerns
Concerns over inflation and aggressive rate hikes by the global central banks have hit the market sentiment. Foreign portfolio investors (FPIs) have been on a selling spree since October 2021 and foreign funds’ ownership in domestic equities has hit a multi-year low of 19.5 percent in March in NSE500 companies valued at ₹61,900 crore.
As per a Bank of America Securities India report, the foreign portfolio investor ownership in March 2022 is the lowest in the past three years. In March 2019, which was a pre-covid period, it was 19.3 percent.
"Hawkish stance by the Fed, rate hikes by RBI, Bank of England and Australian central bank have created an atmosphere of risk-off for equities. We don't know how long this will last," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
"Nifty corrected by 3.9 percent last week, but investors should not commit the mistake of aggressively buying on this dip assuming that prices have corrected a lot. Even after the correction, Nifty is trading at around 19 times FY23 earnings. This is higher than the long-term average of 16 times and certainly not a buyable valuation, particularly when equity markets globally are facing many headwinds like the risk of a growth slowdown, the Ukraine war and supply chain disruptions caused by stringent lockdown in China. However, long-term investors may start nibbling at high-quality stocks in segments like financials where there is valuation comfort," he added.
In a May 5, 2022 note, Christopher Wood, Jefferies Global Head of Equity Strategy, wrote in his GREED & fear note that India remains Asia’s best long-term structural story in terms of equities and investors should accumulate their favourite Indian stocks on weakness.
"GREED & fear continues to believe that this is a year where investors should accumulate their favourite Indian stocks on weakness in what remains Asia’s best long-term structural story in terms of equities," wrote Wood.
Wood, however, added with more rate hikes likely coming, combined with the continuing risk and higher crude oil prices are the headwinds of the near term.
"Indeed GREED & fear had been expecting India to underperform in the Asian context in the first quarter of this year, as it probably would have done were it not for the further collapse in Chinese equities triggered by President Xi Jinping’s decision to double down on the Covid suppression policy," Wood wrote.
Disclaimer: The views and recommendations made above are those of individual analysts and not of MintGenie.
