37119What problems are there with recycled mobile numbers?

Concerns over Covid-19 and ongoing state-wise restrictions have turned the equity investors cautious on Dalal Street. However, analysts continued to retain their bullish view on the domestic equity market on hopes of rapid improvement as seen in Britain and Spain, where a similar high infection growth rate was seen.

An analysis by Antique Stock Broking on the state-wise Covid-19 situation suggests that 13 states constituting 68% of India’s GDP have already started showing signs of improvement. “Given the uncertainty around the informal segment, consumer demand and margin pressure, we are underweight in NBFC and consumer linked sector,” it said adding Nifty can hit 16,600 by March 22. At present, the benchmark NSE Nifty index is hovering at the 15,000-mark.

The brokerage suggested some key changes which can protect your portfolio from volatility. Have a look:

What to do with bank stocks
Turn overweight on banks after the recent correction. It also sees limited asset quality risk in banks as infection situation is improving.

Cut NBFC exposure
Reduce weight in NBFC because of asset quality concern emanating from the informal segment.

Don’t bet on discretionary players
Reduce weight in consumer discretionary (auto, consumer durable, retail, hotels) because of the uncertain demand environment, margin pressure and elevated valuation. The brokerage prefers real estate linked plays within the discretionary space.

Bet on globally linked sectors where there is a possibility of earnings upgrade:

a) Metals is in the midst of commodity up-cycle given strong global demand, global de-carbonization theme leading to supply cuts, attractive valuation and sharp debt reduction.

b) IT services: Demand outlook remains strong as indicated by deal commentary. Also, there is a possibility of a slight earnings upgrade due to lower travel cost. Rupee depreciation due to US asset tapering towards the end of 2021 is an added macro tailwind.

c) Pharma and chemicals as there is a possibility of earnings upgrade due to launch of Covid-19 related products and positive surprise from US generic business.

Lookout for domestic cyclical plays
Look for value in domestic cyclical plays like capital goods, infrastructure and cement. The brokerage remains constructive on medium-term investment-led recovery (current infection wave may have postponed the recovery by 1-2 quarter).