Use headwinds as opportunity for investing in strong balance sheets; 5 stocks with up to 29% upside potent

In the correction that markets saw in the last four trading sessions, the financial sector stocks, right from banks to other players also declined. But if one looks at the magnitude and the internal breadth of the sector it was much better as compared to a month back when the market correction was started by HDFC bank. There was a bit of profit booking in the PSU bank space, but once again after a small corrective move, things were back with a strong intraday recovery. The way things are panning out in the industry with regulatory tightening taking place, there is very likely that we might see a divergence in performance of different segments of this sector which has the highest correlation with the GDP growth. Better balance sheets and strong franchise are likely to be the differentiating factors. The factor which is largely technical in nature is the shareholding patterns that will also impact the performance of the stocks from this sector.

When valuations are high and sentiments are bullish, it would be better to add the word “ caution” to your portfolio. Now how does one do it ? By putting some quantitative parameters when making a decision to buy a stock. Refinitiv’s Stock Report Plus which lists stocks with high upside potential over the next 12 months, having an average recommendation rating of “hold” or “buy” or strong buy .

This week there was a sharp correction in the mid-cap index, and market breadth was also weak. This should serve as a warning to all those who are buying stocks without bothering to look at what is the business of the company. The way correction panned out, there is higher probability of a correction in mid-cap space continuing if there is more trouble with Nifty. But rather than bothering about what will happen to nifty in the next few weeks or quarters, long term investors looking to take exposure to the mid-cap should focus on individual companies and their underlying business. At the same time, because overall valuations are high, be ready for underperformance for some time and focus on the long term.

After inline numbers from TCS and disappointment by infy, it might appear that Q4 earning season for the IT sector has taken a back seat. That might not be the case, as Q4 results will throw a light on how individual companies are managing the situation in a changed environment. 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.

At a time when worrying about what will happen to the global financial markets is the norm, it is better to stay focussed on long term wealth creation and companies which have the right combination to make it. Of all the stocks, which our algorithms come up with, we took companies from four sectors: defence, FMCG, agrochemical and natural resources. ET screener powered by Refinitiv’s Stock Report Plus lists down stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy .

The bull run which started right in the middle of 2020 when covid was ravaging the world, had seen many sectors coming into limelight. One among them was agrochemical. The whole sector got rerated and some of the Indian companies which are focussed on domestic markets got fair share of attention from the street. But then they faced headwinds and have been underperforming, but in case of the companies the headwinds are temporary and the underlying changes these companies are doing makes them worthy of looking as long term investment bets. ET screener powered by Refinitiv’s Stock Report Plus lists down stocks from the chemical sector with high upside potential over the next 12 months, having an average recommendation rating of “buy” or a “hold”.

While the recent performance of stocks like REC, PFC and recently listed IRDEA has brought focus back to one segment of power companies. But the fact is that in the last few years, the sector has been going through a consolidation. Some of it was forced by the banks due to many companies going under the IBC and some due to the fact that any industry which has gone through a troubled phase of almost a decade, the players who are able to survive tend to get more attention because they have learnt the art of surviving a tough phase which is one most important feature for long term survival. Power sector stocks are now catching up with what the market has witnessed in the last few years.