Yes you read that right. Nifty as per our analysis is heading higher for targets of 23856 in the next few months. So overall the idea should be to buy the dips and panics however what will be the best undervalued stocks to buy? and at what levels to buy them ? This will also determine how well your portfolio will do.
Avoid stocks in FMCG, Auto's, OEM's for now
We have been very categorical about this to avoid longs in fmcg, auto's and oems for the past few months because of steep rise in input cost. These input cost pressures cannot be passed on immediately and hence bottom line margin pressures will remain for the near term. The bigger issue is that commodities have broken out after a 10 year consolidation. Anyways this is not the only problem for these sectors. FMCG is facing stiff competetion from in house brands of dmart, amazon, reliance retail and also big basket and hence besides bottom line pressures eventually these guys will start seeing pressure even on the top line.
Auto's facing big EV challenge
Auto companies ex of Tata motors has been behind the curve as far as EV is concerned and we believe that EV is the future. The problem for all legacy players is that making ev vehicles is not that difficult and hence we will be seeing the likes of apple and many other new players in the market over the next few years. This means a lot more competition and whenever there has been massive competition we have always seen market share erosion and margin issues so fundamentally this sector will not be on my radar unless this outlook picture is clear.
EV, Green Energy, Selected Banks will outperform
The rising inflation issue will keep commodities rates higher and hence the only way to go will be green energy way be it solar, wind or hydro. Eventually going forward over the next few years thermal energy will be replaced and we see massive opportunity here. We believe that what IT stocks were offering in the 1995 era these stocks (selected stocks) are offering that kind of opportunity so this is one place to go long. Selected banks also will go very well and outperform on the way to 23856. It's no secret that we like Icici bank and this is a part of our model portfolio suggested to our clients.
Those who would like to get detailed updates on what to buy when to buy and how much to buy can just start a trading account with me in IIFL and our premium research is free for all active clients. In case you would like to have any more details feel free to call me on 95 6316 6316
As usual if you are only trading/investing on the basis of this post please use your own risk management and then only trade/invest. Please do not over trade and always keep your risk in check.
Good trading and investing to you.