FMCG & Auto Stocks Outperform Amid Nifty Decline – Ajit Mishra
Navigating Choppy Waters: Finding Opportunity Amidst Market Uncertainty
By Victoria Sterling
After a promising near-two-week rebound, Tuesday’s trading session delivered a stark reminder of the market’s inherent volatility. Selling pressure gripped the indices from the opening bell, leaving investors searching for solid ground.”What made it worse was the banking sector,” explained Ajit Mishra, SVP – Research at Religare Broking, in a conversation with ET Now. “Private banks have not participated in this recovery at all. Today, with heavyweights dragging, sentiment was further dampened.”
The Nifty’s slip below the crucial 24,800 mark, its 20-day exponential moving average (EMA), served as a warning sign. Mishra suggests the index may slide further towards the 24,600-24,630 range, aligned with the 100-day EMA. “The recovery has derailed.From here, consolidation with a negative bias seems more likely in the days ahead,” he cautioned.
However, amidst the prevailing gloom, pockets of strength emerged, offering a beacon of hope for discerning investors. The Fast-Moving Consumer Goods (FMCG) and auto sectors demonstrated remarkable resilience.
Maruti Suzuki, such as, surged nearly 2% on robust volumes, reaching record highs. “It looks like shorts are trapped, and that’s fuelling further upside,” Mishra noted. FMCG giants like hindustan Unilever (HUL) and Nestlé held their ground, while Marico, Godrej Consumer, and Britannia also displayed notable resilience.
Where to Find Opportunity:
Mishra believes that even if the market weakens, FMCG and auto stocks are poised to outperform. “The momentum in stocks like Maruti, TVS, and Eicher looks intact. From FMCG, I’d keep a close eye on HUL, Britannia, Marico, and Godrej Consumer,” he advised.
A Balanced Approach:
In these uncertain times, a balanced strategy is paramount. Mishra recommends maintaining exposure on both sides of the trade. He highlights Godrej Consumer as an attractive opportunity: “godrej consumer has rebounded smartly and is holding firm even during profit-taking phases. One can accumulate at current levels for a target of ₹1,320 with a stop at ₹1,228.”
Navigating the Banking Sector:
Conversely, caution is advised regarding the banking sector. “With the index slipping below critical support, more pressure is likely,” Mishra warned. He identifies IndusInd Bank as a potential shorting candidate, with a target of ₹720 and a stop loss at ₹788.The Road Ahead:
The market mood remains clouded with uncertainty. While banking weakness has dampened broader sentiment, the defensive nature of FMCG and the continued strength of select auto stocks offer potential avenues for growth. As always, careful analysis, a balanced approach, and a keen eye on emerging trends are crucial for navigating these choppy waters and identifying opportunities for long-term success.