Adding more filters to counter valuation risk: 5 midcap stocks from different sectors with right mix, 2 wi

Whether it is the bullish or bearish phase of the markets, it always pays to stay with a better quality of balance sheet and in companies which have the ability to withstand the slowdown which every economy faces at different points of time. Especially when valuations are not cheap by any standard, it would be good to stay with large caps if one is thinking of increasing exposure to equity. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

After a phase of consistent upward movement at the start of FY24, broader market indices have once again witnessed a phase of volatility in the last two weeks. The selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.

For all those who are entering into stock markets at this point of time, there is one thing which they need to remember, volatility comes without any prior notice. It would be better for oneself to be prepared and one of the ways to be prepared for it is by staying with large caps at this point of time. Coming on the list is a cement major and Auto ancillary company which has recently opened two dedicated plants for supplying part of electric vehicles to OEM’s. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

On wednesday, global markets were rattled by downgrade of US paper by Fitch. In line with other global markets, How long this correction continues is anyone guess. But what is under the control of an investor is to stay with stocks which have shown tendency to fall less in a bearish market. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

On the face of it, to many it might appear that the stock market has gotten into correction recently. However, the fact is that a large part of the stock market has been in bearish territory since November 2021. A look at market breadth will show that the number of mid caps which have shed weight is far more than stocks which have gained weight. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

After a corrective wave of more than eight weeks, whether it is Sensex or Nifty, the underlying bias has once again turned bullish, specially in midcap space. But one headwind remains that is valuation which is still at a higher level. So, it would be better to be bullish but selectively. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.

On Wednesday, thanks to one stock, Reliance industry, nifty was able to make a comeback. But what is more important is that market breadth, which has been under pressure for most of the sessions for the last three weeks, was in the green territory for most of the time. It is important to keep one eye on market breadth as that would be a more reliable indicator for deciding the strength and possible time frame for which the rally may last. Another thing which one should monitor closely is when the numbers of how much money has flown to mutual funds in the month of March which would get released in early April. This would be an indication of how much impact did AMFI advisory to mutual funds had on ground. Also, this would answer the question, whether this is another short term profit booking move or a beginning of a long phase correction and valuation adjustment.During this phase, analysts are bullish on select stocks from different sectors, some of which are either the leaders of their sector or part of the top three companies which are known to be well managed. ET screener powered by Refinitiv’s Stock Report Plus lists down quality stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy . This predefined screener is only available to ET Prime users.

At the start of 2023, the mood in the market was bullish but there were some apprehensions due to many reasons primarily being that FII’s had not been buying and there were some mega IPO issues in the pipeline. By the end of 2023, there is only bullishness on the street. Why most investors are feeling bullish is not that FII have returned to markets, but the fact that because mid-cap stocks have done extremely well and their portfolios are once again showing decent returns. As the party continues while staying bullish, just add an element of caution. When we use the word caution, we means stay with quality.

Stay bullish, but just add an element of caution which means stay with quality. There is quality in every segment of the markets, but when one is buying midcap stocks it is more important to focus on quality as these companies and also their stocks may have relatively less ability to withstand a corrective phase, either because of the nature of the business or because of technical reason like shareholding pattern. Following stocks have come from Refinitiv’s Stock Report Plus which lists stocks with high upside potential over next 12 months, with average recommendation rating of “buy” or strong buy