What to do with Paytm, HUL, Adani Green and 3 other stocks? Aamar Deo of Angel One decodes

Edited excerpts:

Indian markets seem to have dusted the election outcome and have been on the up for the second week in a row. Unlike in 2014 and 2019 when Mr Modi came back with a more decisive mandate, this time the markets have outperformed with a lower mandate. What is your view on this exuberance?

Markets are inherently intelligent by nature and structure, and given the kind of election mandate, markets had factored in the anti-incumbency & challenges that the government would face in the elections. However, as the results were in wide disparity when compared with the exit polls, markets witnessed heightened volatility, but then recovered sharply to trade at record highs, up 4.34% in June.

It appears that markets are satisfied that the pace of reforms and policies will continue unimpeded and India as a country, will continue to outperform the rest of the world in economic growth. Further, FII buying coupled with step-up in domestic buying has added buoyancy to the markets, aided by positive global sentiments as well. All this bodes well for the markets but given that markets and many stocks trade at record levels, a cautious approach should be adopted by investors.

The market is now looking at another big event in the form of Budget 2024 which is just a few weeks away. What is your expectation from Nirmala Sitharaman from the stock market standpoint?

Expectations run mixed from the July 2024 Budget as this would be the first from the NDA government, as this time, it’s a coalition government and not a full-majority government. However, with the finance minister remaining the same, expectations are that the government would focus on healthcare, affordable housing & real estate, relaxation and some forms of benefit for the masses to ease the burden of inflation, and priority on the MSME sector, which is looking up to the government for a more supportive ecosystem to help them survive and thrive. Further, some tax exemptions for investors and the salaried class could also be taken into consideration, but it still remains a fantasy till the time does not happen.

What is the target for Nifty till the budget and which sectors will your focus be on?

Nifty has managed to bounce back from its recent low of 21,281 witnessed on election result day, and since then, has rallied by almost 10% from its lows to currently trade around the 23,400 level. Immediate level of resistance for Nifty is seen around the 23,500-23,600 zone and sustaining above this level, could take Nifty towards the 23800-24000 mark. On the downside, Nifty stands strongly supported around the 22700-23000 zone. Markets ahead of the budget are likely to remain volatile, aligning with global and domestic cues. Sectors to focus on will continue to be defence, power, financials, PSUs, real-estate, healthcare and pharma to name a few. However, investors need to have a long-term perspective when entering markets at current levels, with an SIP mode philosophy.

We have been hearing market experts recommending investors to rationalise their focus on PSU stocks. Yet, it appears the investors are not affected. Look at the rally in Mazagon, EIL, NBCC and so many others. Are you seeing a FOMO creeping-in now and hence more activity in the run-up to the budget. What should one do?

Most of the PSU stocks continued their dream run this week too, and as rightly put, it appears that FOMO is creeping amongst the investors as many of the PSU stocks, in defence, power, financials, infrastructure, have turned out to become multibaggers, significantly adding to the wealth of the investors. However, at current levels, becoming too aggressive is not a good idea as valuations are no longer cheap but the flow of funds into the markets is keeping the stocks in an uptrend.

So, investors can keep a close eye on these quality stocks, but at the same time, look at accumulating them on corrections, with a longer-term investment perspective.

This week also belonged to infrastructure, realty and energy stock. Investors are not just buying these stocks directly but also putting money in these themes through mutual funds. If you have to give one stock from each sector with a view of the budget, what will you pick?

Savvy investors who entered into these sectoral stocks in the past couple of months and stayed put, are sitting on handsome profits today but entering at the current levels poses challenges of risk versus reward. Investing in sectoral mutual funds is always a better idea, given that the benefits of diversification and the funds being managed by professional fund managers, adds onto the investing appeal.

However, investors still looking at adding stocks in these categories, can consider, Power Grid, IEX & DLF, to name a few from a long-term perspective, but only on corrections and having a longer-term investment horizon, as the risks at investing at current levels continue to outweigh the rewards, hence the MF route is better advised when markets trade at record highs.

Among the top gainers this week were Praj, Titagarh and Paytm while Adani Green, Marico and HUL were among major laggards. What should investors do with them?

While on one hand, stocks such as Praj, Titagarh & Paytm gained 19%, 22% & 11% WoW, Adani Green, Marico & HUL lost 3%,5% and 4% WoW respectively. Investors long in Praj can hold onto their positions with a trailing stop loss below 650, whereas they can look at booking profit in Titagarh as a top has been formed on the charts. Paytm investors need to watch out for the crucial zone of resistance around the 430-440 zone, for any meaningful rally to occur, the stock must trade and sustain above the 440 mark. In case the stock is unable to breach the 440 mark, part profit booking is advised.

On the losing stocks, Adani Green appears to be consolidating in the 1700-1900 range and till a breakout above 1900 does not materialize, the stock could trade sideways. Those long in Marico can hold with a stop loss below 580 but at the same time, should look at exit opportunities as the stock appears to have formed a short-term top. Lastly, investors can hold onto HUL as it is trading with an overall positive bias, in the range of 2350-2650. For any significant rally in HUL, the stock needs to sustain above the 2550 mark.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)