Skepticism on stock price vs tailwinds of policy push: 4 defence sector stocks with upside potential of up

As other sectors dominated by PSU companies come into limelight, defence stocks which ignited the re-rating of PSU stocks have moved into consolidation mode for some time. The question is whether the business is in consolidation mode or not, the answer is tilting toward no. It appears the underlying developments in the sector continue to be going at the same pace or rather even more. Allowing 100 % FDI in space related industries, is probably an indication that focus on defence and related sectors continues. As things are shaping up, it appears the exports would also become a focus area.

Check out Stock Reports Plus, powered by Refinitiv, for price targets of over 4,000 listed stocks along with detailed company analysis focusing on five key components - earnings, fundamentals, relative valuation, risk and price momentum to generate standardized scores. SR+ Reports is a complimentary offering to ETPrime members.

As a sector, metal is one of the most challenging ones, not only for investors but even for the promoters running it. Right from the demand matrix of the actual product, another big part of the equation is currency. Right from how the US dollar will pans out to how other cross currencies equations impact the bottomline. Last but not least, metal stocks have a strange relationship with financial ratios, when they appear cheap based on some ratios they are actually expensive and vice-versa. At this point of time, if one looks at the news flow, it is largely negative for the sector. Probably a time for contrarian bet with a hedge.

One sector which has been firing on all cylinders has been the auto sector, it started with stocks like Ashok leyland, Tata motors, Eicher motors.doing extremely well in the first phase of auto sector bull run.Then it was companies from the tyre sector which saw a sharp upward trend and then a select few auto ancillary stocks. It was in the third phase where 4 wheeler and 2 wheeler companies joined the bull run. One of the reasons why there has been a difference between different segments joining the rally at different stages has been the fact that each segment has been adjusting to the transformation to the EV space. The adjustment process is still on, so rather than taking exposure to a single stock it would be better to have a look at the basket of the stocks and have a mix. There are some stocks which are not been looked favorably by analysts as they believe that stocks have seen a run up but the fact remains that as sector one of the best proxy for taking exposure to economic growth.

Gone are the days, when a single company was considered a bellwether for IT sector stock. Today, whether it is a large or mid sized company, all have different focus areas and hence their quarterly results tend to differ from one another. Stock Reports Plus, powered by Refinitiv, is a comprehensive research report that evaluates five key components of 4,000+ listed stocks - earnings, fundamentals, relative valuation, risk and price momentum to generate standardized scores.

Despite the fact in the last one year, only negative things have been said about IT companies, look at their stocks performance. Except one large IT stock which had been a perennial under performer, most of the other IT stocks are not very far from the highs they had touched almost two years back. Infact relative performance of some IT is far better than many of the stocks and sectors which have been headlines. While it might be contrarian buy, there is high probability that IT stocks perform better than most in bearish market conditions. Stock Reports Plus, powered by Refinitiv, is a comprehensive research report that evaluates five key components of 4,000+ listed stocks - earnings, fundamentals, relative valuation, risk and price momentum to generate standardized scores.

In a market in which stocks of companies undergoing bankruptcy are quoting at half billion market cap, finding stocks which have value is probably not something which is an easy thing. It is time when the choice has to be made between fairly priced or overpriced. Given the sentiments, investors are more prone to buying stock first and then looking at what is the business of the company, that too is done by very few. It is exactly the time and sentiment when it becomes extremely important to go back to the basic principle of investing. Put more checks and balances before you buy the stock and the reason for buying that stock at that point of time. So as you stay bullish, be selective.