Not time for bottom fishing yet say experts even as many blue chips hit their 52 week lows
- Blue chip stocks like Reliance Industries, Infosys, Wipro, Bajaj Finance and Cipla are amongst the top losers on Nifty50 in the last one month.
- While the Nifty50 stocks that are close to their 52-week low look attractive, they might face the brunt in the near term, say analysts.
- Analysts believe that there is more pain left in the near term as markets could witness some more jitters from global markets.
AdvertisementIndian markets have been under pressure in the last few weeks in tandem with the global markets that spooked investors with the collapse of Silicon Valley Bank, Signature Bank and the turmoil at European bank Credit Suisse.
As a result benchmark indices, Sensex and Nifty50, have tanked more than 4% in the last one month tracking negative cues in global markets. The selloff in the last one month has impacted shares of even large cap companies especially IT and banking sector.
IT majors like Infosys and Wipro are among the top 10 stocks that are near their 52-week low considering IT companies’ exposure to US banks amid financial turmoil in the US banking sector.
The oil-to-telecom conglomerate Reliance Industries is also bearing the brunt of the massive selloff by foreign institutional investors (FIIs) in the last eight sessions. Analysts say that the telecom business if the company could be looking at a no-tariff-hike scenario in 2023, as it believes Jio has made a shift in its strategy, targeting premium subscribers instead of the low-end ones.
Silicon Valley Bank’s downfall was triggered by the lender’s heavy reliance on 10-year mortgage-backed securities that dropped in value due to a rapid rise in interest rates in the US.
Meanwhile, Switzerland-based Credit Suisse took a hit on March 15 after a top investor Saudi National Bank said it doesn't want to provide any further liquidity to the embattled Swiss bank, according to reports. On March 19, its rival UBS Group AG stepped in and agreed to acquire Credit Suisse for almost $32.5 billion.
FII sell off affects blue chip stocks
All the upheaval led to a sell off as foreign institutional investors (FIIs) dumped stocks worth ₹13,122 crore in the last eight sessions — from March 9 to March 20. Blue chip stocks like Wipro, RIL, Cipla, Infosys and Bajaj Finance were among biggest losers on Nifty50 in the last one month, as per data on NSE.
|Top Nifty50 companies close to 52-week low||CMP||52-week low|
|Tata Consumer Products||704.5||686.6|
|Kotak Mahindra Bank||1,702.55||1,631|
|HDFC Life Insurance||480.6||457.8|
|SBI Life Insurance||1,093||1,033.20|
‘Nifty50 stocks likely to fall amid global negative cues’
While the Nifty50 stocks that are close to their 52-week low look attractive, they might face the brunt in the near term, say analysts.
"Index stocks are beaten down on concerns around inflation, rising interest rates, slowdown in India and the US economy, SVB crisis, fall in yields and so on. So this may not be the best time to do bottom fishing by buying 52-week low Nifty50 stocks because they are likely to fall further amid global negative cues,” said Arun Kejriwal, founder investment advisory firm Kejriwal Research and Investment Services.
Analysts believe that there is more pain left in the near term as markets could witness some more jitters from global markets.
“Next 4-5 weeks markets will remain volatile and likely in a downward trend as aftershocks of the crisis will continue leaving investors in a panic mode," added Kejriwal.
Short-term volatility to remain
A few analysts however believe that while the short-term volatility will remain, their long-term story remains intact.
"I believe the current fall in the large cap stocks has made the risk reward much more favorable. However, in the near term volatility will be heightened as sentiment is fragile,” said Sanjeev Hota, vice president, head of research at Sharekhan BNP Paribas, told Business Insider India.
Sectors that have been impacted the most due to the banking crisis in the US include IT and banking because of the sector’s exposure to the BFSI space across the world banks in fear of some jitters in the Indian markets.
“IT and banking are the two sectors that have been impacted the most because of turmoil in the global market led by the SVB and Credit Suisse crisis. Till things stabilize in the global space there is a possibility of more underperformance from these sector companies,” added Hota.
On the other hand, PSU stocks may gain some traction because of some sense of security and high dividend yields in their stocks.
“At the same time, PSU stocks look good with chances of more outperformance in the current scenario. Also, because PSU stocks hold high dividend yield and when there is nervousness in the market they tend to gain," said Hota.
The lows which ideally offer good entry opportunities might however become long-term plays due to the heightened volatility – which they believe might take time to subside.
|Top Nifty50 losers in last 30-days||% change|
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