Investors Need To Exit Underperforming Stocks

NDA win in the Delhi State Assembly elections after the strong show in Haryana and Maharashtra allayed fears about the stability of the central government and erased all concerns raised post the general elections in June 2024

Influenced by multiple local and global factors like US President Trump’s tariff threats, strengthening of the dollar against the rupee, weak Q3 earnings, and domestic growth slowdown; the domestic stock markets consolidated for better part of the week and closed on a weak note. BSE Sensex declined 628.15 points, or 0.82 per cent, while NSE Nifty went down 133.35 points, or 0.58 per cent. It is pertinent to observe that in the ongoing rout in the small- and mid-cap space that has drained portfolios, investors have been advised by experts to take refuge in largecaps.

However, the Nifty Next-50 index, which is classified as a large-cap index suffered 22.3 per cent decline surpassing even the small-cap index’s 20.2 per cent drop. In contrast, the Nifty-50 correct-ed by just 12.9 per cent during this period. The combined market valuation of eight of the top-10 most valued firms eroded Rs1,65,784.9 crore last week, with Tata Consultancy Services (TCS) taking the biggest hit, in line with bearish trends in equities. During the week ended, FIIs recorded net sales of Rs3,449.15 crore in the Indian equities, while DIIs were net buyers at Rs2,884.61 crore.

The FII net selling in just 50 days of 2025 tops Rs1-lakh crore as ‘Sell India, Buy China’ gains pace. It can be observed that Chinese tech shares rallied following Chinese startup Deep Seek’s breakthrough and proactive nature of Chinese Govt towards tech sector again, and Hong Kong’s Hang Seng hit a four-month high, buoyed by tech stocks. Reports indicate that the Domestic Mutual Funds (DMFs) have increased their share in Indian equity markets, with their ownership in NSE-listed companies reaching a high of 10 percent in December 2024. Further, individuals, both directly and through mutual funds (MFs), now own a record-high 18.2 per cent of the market, surpassing FPI share for the first time since 2006.

On the other hand, the share of foreign portfolio investors (FPIs) has plummeted to a 13-year low of 17.4 per cent, according to the latest report. In the last few days, the market seems to be ignoring all the good news. Good news in terms of boost to consumption in Union Budget by higher-than-expected relief for taxpayers, the RBI’s 25 bps cut in the interest rate along with steps to ease liquidity pressures have been ignored. NDA win in the Delhi State Assembly elections after the strong show in Haryana and Maharashtra allayed fears about the stability of the central government and erased all concerns raised post the general elections in June 2024.

In volatile times understand the importance of buying good quality stocks and/or focusing on valuations rather than chase momentum. Quality matters and wealth creation is all about having a high-quality balanced portfolio. Use the volatile phase to exit under-performing stocks with weak fundamentals. Remember, the time spent in the market is more important than timing the market.

Buffett Chatter: Warren Buffett is known for picking stocks, but these days, he is increasingly picking cash. Berkshire Hathaway’s cash pile rose above $300 billion in the third quarter—easily a record and its highest as a percentage of company assets in data going back to 1998. Holding lots of cash is standard practice for Berkshire, but the scale of the recent build-up has raised eyebrows among several investors. However, over the weekend, Buffet in his newsletter said that Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.

You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.

F&O / SECTOR WATCH

Heightened volatility was seen in several stock futures triggered by ‘Trump Tantrums’. Nifty shed around half a percent, while Bank Nifty lost close to a quarter percent due to uncertainty over the impact of US trade policy. In the options market, prominent Call Open Interest for Nifty was seen at the 23,100 and 23,000 strikes, while the notable Put Open Interest was at the 22,500 strike. For Bank Nifty, the prominent Call Open Interest was seen at the 49,500 and 50,000 strikes, whereas notable Put Open Interest at the 49,000 and 48,500 strikes. Implied Volatility (IV) for Nifty’s Call options settled at 13.50 per cent, while Put options conclude at 14.19 per cent.

The India VIX, a key market volatility indicator, closed the week at 14.86 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 0.90. With the key support level of 22,800 breached, the downward trend may persist. The next critical support level to watch is 22,500, while resistance levels stand at 23,000 and 23,200. Anticipate Nifty to trade within the 22,500-23,200 range over the coming week.

Currently bias is under control of bears as of now so any market rise should be considered a sell-on-rise opportunity. Metals, PSE, and Energy were the major gainers, while selling pressure was seen in Auto, Pharma, and FMCG sectors. Zomato and Jio Financial Services have entered into the Nifty-50 index as part of the semi-annual reshuffle. Oil marketing ma-jor Bharat Petroleum Corporation (BPCL) and FMCG player Britannia Industries have been excluded. Stocks looking good are Chambal Fert, Cyient, Hindalco, JSW Energy, SBI Life and NBCC.Stocks looking weak are Birla Soft, M&M, Sun Pharma, Prestige, Policybazar, Tata Consumer, and Nykaa.

STOCK PICKS

MOIL Ltd

MOIL Ltd is a manganese ore producer with 53 per cent of the country’s total manganese ore is produced by it. The company has three segments: mining, manufacturing and power generation. The mining includes mining of manganese ore. The manufacturing includes manufacturing of ferro manganese, electrolytic manganese dioxide. The power generation includes wind power turbine generator. The company operates its underground and opencast mines located in the Nagpur and Bhandara districts of Maharashtra and Balaghat district of Madhya Pradesh. Its Dongri Buzurg Mine, located in the Bhandara district of Maharashtra, is an opencast mine that produces manga-nese dioxide ore used by the dry battery industry.

The company’s annual production is approximately 1.3 million tons. It produces and sells different grades of manganese ore, such as high-grade ores for production of ferro manganese, medium grade ore for production of silico manganese, blast furnace grade ore required for production of hot metal, and dioxide for dry battery cells. MOIL has achieved highest ever production and sales of Manganese ore, and also the record turnover in FY 2023-24. Large demand supply gap in Indian Manganese Ore market presents an opportunity for import substitution.

Company has got logistical advantage, as all its mines are well connected with State / National Highways. Most of its mines are located with railway network of South East Central Railway and are provided with railway sidings. Strong financials with high net worth and zero debt make the company good buy for medium-term target of Rs600.