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Buy on the dips? Iifl’S Bhardwaj lists these actions to accumulate in this fix


Has the recent correction brought Indian equity valuations down to more reasonable levels? The major indices are showing signs of overheating again after a decline, which came after a large cash-led rally that lasted 18 odd months.

Investors can use current market conditions as a buying opportunity on long-term downside and take a specific approach to short-term stocks. That’s the message from Sandeep Bhardwaj, CEO-Retail of IIFL Securities.

Bhardwaj expects the Nifty50 to resume the next stage of an impulse move once it gets support around 16,300 to 16,500 levels. “Currently, we see the market as a buy-on-dips around its 200-day moving average level with a medium to long-term view … Historically, a buy-on-dip strategy has worked by increasing phase positions. moving average forward, ”he told CNBCTV18.com.
The benchmark of 50 certificates has risen by more than 123% since March 2020, when India first announced a full lockdown to curb the spread of the COVID pandemic. As of December 2, the index rewarded investors with a return of 32.5%.

Favorite blue chips

IT and healthcare stocks were in high demand during this period, outperforming the financial basket of heavyweights.

Bhardwaj is bullish on stocks of bank and non-bank financial companies as they play a key role in economic growth. “We think he’s likely to move forward,” he said, suggesting long-term investors use a buy-on-bear strategy to go long in ICICI Bank. , SBI and HDFC Bank. “These companies have been able to manage the quality of their assets well and reduce their provisions,” he said.

Financial services stocks have the biggest say among sectors when it comes to the movement of blue chip indices. Space commands the maximum weight, almost 37%, in the Nifty50 universe, followed by IT shares (17.8%).

When asked if one could expect sector rotation in the market now, he said yes, saying IIFL Securities now has diagnostic and infrastructure sectors under his watch.

Index 12 months (until December 2) 2020 2019 2018
clever50 32.5 7.9 12 3.2
Smart bank 24 -8.4 18.4 6.3
Nifty Pharma 11.1 51.8 -9.3 -7.8
Smart computing 62.9 41.8 8.4 23.8
Smart health care 20.3 49.4 -6.7 -5.8

“With the rapid increase in government spending to be sustained and a resumption of awarded projects, we believe that infrastructure as a sector can outperform. As we prepare for an impending third wave, we expected an increase in testing activity, favoring many listed diagnostic players, “he said.

From the large-cap IT basket, he remains optimistic on Infosys, HCL Tech and Persistent Systems.

Here’s how Bhardwaj’s stock picks have behaved lately:

Store To recover (%)
Three months Six months 12 months
ICICI Bank -1.1 10.2 48.7
HDFC Bank -4 -0.5 9.9
SBI 9.7 7.6 84.6
Infosys 2.1 24.9 54.1
HCL technology -0.3 24.7 35.9
Persistent systems 26 -33.7 29.7

New age companies

Bhardwaj a Nykaa and Zomato among its top picks among recently listed new age companies.
Buy on the dips? Iifl'S Bhardwaj lists these actions to accumulate in this fix
Buy on the dips? Iifl'S Bhardwaj lists these actions to accumulate in this fix
Coming to the defense of new age companies on the valuation front, he said: “A lot of these companies have multi-year growth ahead of them, so you have to invest selectively in them. For example, we are optimistic on Chemplast Sanmar, which is the largest producer of PVC resins in India and the industry in which they operate has very high barriers to entry. “
Buy on the dips? Iifl'S Bhardwaj lists these actions to accumulate in this fix
His remarks come at a time when new-age companies have largely received a strong response from investors, with the exception of Paytm, whose shares continue to recover after a series of losses since its low listing last month. . The market debut for Paytm’s parent company, One97 Communications, is among the weakest in recent times.

New age businesses cannot be valued by traditional methods, he said. “Most of these companies have historically experienced exponential growth due to the network effect, an increase in revenue that makes it very difficult to integrate traditional models.

Over time, their true value will emerge through market forces, Bhardwaj said.

IIFL Securities is part of the IIFL group, which manages and advises assets to the tune of $ 50 billion.


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