oi-Vipul Das


The Russia-Ukraine dispute has accelerated market volatility, and Motilal Oswal, a domestic brokerage firm, has picked up stocks from the mid and small cap space that have corrected at least 20-30 percent from their 52-week highs, as well as stocks from the large cap space that have corrected at least 10-20 percent from their 52-week highs, amid the uncertainty and rising geopolitical frighten.

Top Stock Picks By Motilal Oswal Which Have Corrected 20-30% From 52 Week Highs

“The Russia-Ukraine conflict has resulted in a global risk-off, with equity markets undergoing intermittent bouts of correction and elevated volatility. The uncertainty over the duration and magnitude of the extant conflict could keep the market jittery and dependent on news flow. From India’s viewpoint, a sharp spike in crude oil prices (Brent crossed USD100/barrel before retreating) poses key risks on the external balance front and can play spoilsport with the assumptions made in the FY23 Union Budget. For now, the sanctions imposed on Russia have excluded the Oil trade. While these are early days into the conflict, higher crude oil prices, if sustained for an elevated duration, can result in higher inflation, current account deficit, bond yields, and interest rates in India and thus impact macro-economic stability,” the brokerage has noted.

According to Motilal Oswal “While the Nifty is down 10% from its Oct’21 peak, the broader market has seen a much sharper sell-off. Of the NSE 500 constituents, 37% of the stocks are trading more than 30% lower from their respective 52-week highs. Of the Nifty constituents, close to 50% stocks are now trading at valuations that are at a discount to their respective 10-year average, while one-third is trading at a premium of more than 10% v/s its 10-year average, demonstrating the two-faced nature of the index on valuations.”

The brokerage has claimed “Post the recent correction, the Nifty is now trading at 19x 12-months forward P/E, which is slightly lower than its 10-year average for the first time since Nov’20. Corporate earnings remained resilient, despite the challenges with 3Q/9MFY22 Nifty earnings growing at 25%/45% and forward estimates for FY22E/FY23E/FY24E remaining stable at INR735/INR876/INR1,006. The healthy earnings visibility can act as a cushion in an otherwise fragile external situation. If the Russia-Ukraine conflict elongates and leads to elevated energy prices for longer, it may impact earnings estimates.”

Motilal Oswal has further added “However, close to two-third of Nifty earnings are insulated/benefits from elevated energy prices (IT, BFSI, Metals, O&G), while one-third is adversely impacted (Consumer, Auto, Cement, Pharma, and Telecom). Our portfolio construction is premised on stocks where the earnings visibility remains solid, pricing power is healthy, and the recent correction has led to moderation in valuation. We continue to remain biased towards large caps.”

Top Stock Picks By Motilal Oswal From Large Cap Space Which Have Corrected Atleast 10-20% From The 52 Week Highs

Company MCap (USDb) Correction from 52W (%)
H D F C 58 -22
St Bk of India 57 -12
Wipro 42 -24.9
HCL Technologies 41 -18
Larsen & Toubro 33 -13
Tata Motors 22 -15.3
HDFC Life Insur. 14 -32.6
Dabur India 13 -14.4
Godrej Consumer 11 -32.6
Apollo Hospitals 9 -19
Gland Pharma 7 -25
Macrotech Developers 7 -27
Source: Motilal Oswal

Top Stock Picks By Motilal Oswal From Mid & Small Cap Space Which Have Corrected Atleast 20-30% From The 52 Week Highs

Company MCap (USDb) Correction from 52W (%)
Canara Bank 5.3 -19.5
Jubilant Food. 5.2 -36
S A I L 5 -36.2
Ashok Leyland 4.6 -22.6
Dalmia Bhar. 4 -39
Zee Entertainment 2.9 -39.5
Whirlpool India 2.8 -35
ICICI Securities 2.7 -25.6
G R Infraproject 1.8 -40
Zensar Tech. 1 -41.1
Mahanagar Gas 0.9 -43.4
Transport Corp. 0.6 -27.7
Source: Motilal Oswal

Story first published: Saturday, March 5, 2022, 9:42 [IST]


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