Patches of green in a sea of red

MUMBAI: When the benchmark index and the most traded derivative, Nifty-50, fell from the heady election results rally of over 12,000 points to below 10,700 in August, it definitely was doom and gloom in the markets. After the June quarter earnings announcements and the lower GDP numbers, analysts slashed the GDP target and naturally, the earnings expectations for Nifty companies. And stocks downgrades followed. However, some stocks have quietly moved up, weathering the storm as they were in the turbulent phase. 

Abbott, for instance, hit a 52-week high of Rs 10,000 on September 9 from around Rs 7,100 levels in mid-May. Merck moved from Rs 3,500 levels to hit a high of Rs 5,120.80 in July and traded last at Rs 4,324.05. Sanofi rose from Rs 5,300 in mid-June to Rs 6,300 in September and Pfizer from Rs 2,800 in August to Rs 3,300 in September. Fund managers and analysts had indicated a relook at pharma stocks in the last couple of months, as these multinational firms had a good run. 

Diagnostic firm Dr Lal Path Labs, which had delivered a smart post-listing gain, hit a 52-week high of Rs 1,360 on Friday from around Rs 1,050 early June. Newly listed diagnostics firm Metropolis has had a steady run from Rs 950 levels in June to Rs 1,350 in September. Apollo Hospitals was a gainer too — from around Rs 1,050 to Rs 1570. “The addressable market for diagnostics services is expected to grow at a healthy 10% CAGR until FY23, while the market share growth for top pan-India chains is expected to grow at 10-14% revenue CAGR,” said ICICI Securities in a report. 

Consumption as a theme had taken a back seat with the slowdown in auto and consumer durables sectors worrying investors. While the debate on consumer preferences and biscuit prices may continue to rage, some handsome gains have been seen in counters like Nestle, Marico, Bata, Asian Paints and Pidilite. Look at the chart of Nestle, Avenue Supermarkets and Vadilal Industries to see how some stocks defied the market direction. 

IT, select finance companies and private banks have been segments most analysts said were safer bets to sail through the tough phase. Stocks like Bajaj Finance had crashed post-budget in July, but since then moved up. As far as indices go, the so-called HDFC twins — the HDFC housing finance company and HDFC Bank — dominate. But, the latest stars from the stable are HDFC AMC and HDFC Life; HDFC AMC gained impressively from Rs 1,800 in June to Rs 2,600 in September and HDFC Life from Rs 440 to Rs 540. SBI Life has been another stock that has been performing well, and has successfully completed an offer for sale last week. As the iconic investor Warren Buffett said, “Be fearful when others are greedy and greedy when others are fearful.” It may be wise to shed fear and look for those pockets of opportunities.