It’s Time For Value Buying For Long-Term Growth

India’s market capitalization (mcap) fell below the $4-trillion mark for the first time in over 14 months, driven by a weakening rupee and a declining stock market. India’s total market cap now stands at $3.99 trn as against its peak of $5.14 trn on December 4, 2023

Spooked by theuncertainty on Trump’s tariff policies & rumours of reciprocal tariffs on India also, mixed corporate earnings, unabated FII selling and rupee depreciation against the dollar; the Indian market snapped two-week winning streak and posted biggest weekly losses in two months during the week ended. BSE Sensex shed 1,920.98 points or 2.46 percent to close at 75,939.21, while NSE Nifty fell 630.67 points or 2.67 per cent to end at 22,929.25. Amidst ‘panic’ triggered by sharp cuts in several mid-cap and small-cap stocks, the broader market underperformed benchmark indices by a wide margin. The BSE Mid-cap Index shed 7.7 per cent and the BSE Small-cap index declined 9.5 per cent. All the sectoral indices ended in the red this week. Nifty Realty index shed 9.4 per cent, Nifty Media fell eight per cent, Nifty Energy index declined 7 per cent, Nifty Auto index shed 6 per cent, Nifty Pharma down 5.7 per cent and Nifty PSU Bank index shed 5.2 per cent.

FIIs have extended their sales by selling equities worth Rs19,004.03 crore, while DIIs bought equities worth Rs18,745.02 crore. It can be observed that during this month, the FIIs sold equities worth Rs29,183.43 crore, while DIIs bought equities worth Rs 26,019.07 crore. During the week, the Indian rupee tested fresh record low of 87.95, but managed to close 59 paise higher at 86.83 per dollar on RBI support. It is pertinent to observe that India’s market capitalization (mcap) has dropped below the $4-trillion mark for the first time in over 14 months, driven by a weakening rupee and a declining stock market. India’s total market cap now stands at $3.99 trillion—its lowest since December 4, 2023—down from a peak of $5.14 trillion in mid-December, marking a staggering $1 trillion erosion. Indian rupee weakened nearly 1.5 percent against US dollar year to date, second worst currency in Asia after Indonesian Rupiah. Contrary to the consensus, market veterans feel that the reciprocal tariffs on India, if imposed by the US, are unlikely to hurt a majority of Indian industries.

As long as agricultural sectors aren’t harmed, lowering tariffs makes sense say some observers. Sectors like financial services and consumer are predominantly safe from any adverse implications of US reciprocal tariffs. Present correction actually is a very good correction in an otherwise long-term bull market that India is in say market players. Use the current downtrend to pick efficient market leaders in sectors with strong pricing power, such as telecom and cement. These sectors look attractive due to consolidation and pricing potential. Old timers say that how much you should worry about the market depends less on what stocks do than on how capable you are of counteracting it. The younger you are, the less you probably need to worry. You have edge older investors don’t: a lifetime of labor income ahead of you.

Follow market trends and history. Don’t speculate that this particular time will be any different. For example, a major key to investing in a specific stock or mutual fund is its performance over five years.

F&O / SECTOR WATCH

The recent shifts in global policies, especially those emerging from the US, are invoking a sense of uncertainty among the FIIs, which in turn is reshaping their investment strategies in dynamic markets like India. Continuous FII selling weighed down the broader indices. Nifty and Bank Nifty dropped over 2.5 per cent and two per cent, respectively, on a weekly basis. In the options market, prominent Call Open Interest for Nifty was seen at the 23,300 and 23,500 strikes, while the notable Put Open Interest was at the 22,800 and 22,500 strikes. 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 strike. Implied Volatility (IV) for Nifty’s Call options settled at 13.72 per cent, while Put options conclude at 14.03 per cent.

The India VIX, a key market volatility indicator, closed the week at 14.96 per cent. The Put-Call Ratio of Open Interest (PCR OI) for the week was 0.85. The 22,800 mark on Nifty is particularly crucial, as any decisive violation of this support is likely to invite further downside pressure. On the upside, strong resistance is expected at 23,500.Fresh buying should be undertaken selectively, with a strong emphasis on risk management. Leveraged exposures should be kept at modest levels to navigate the increased volatility effectively. With market sentiment appearing fragile and downside risks persisting, a highly cautious approach remains warranted in the near term.

Even as India and the US push towards expanding bilateral trade to $500 billion by 2030 and negotiating a trade deal to lower duties and improve market access, the issue of reciprocal tariffs remains unresolved. Reports suggest that India plans to counter US President Donald Trump’s proposed reciprocal tariffs by presenting data showing that most US imports into India attract duties of less than 10 per cent. Some of the stock futures, which have corrected significantly on the issue of reciprocal tariffs are likely to stage a small rebound in coming week.

Stocks looking good Bajaj Finserv, Berger Paints, Bharti Airtel, Hindalco, JSW Steel, Muthoot Finance, Tata Consumer and UPL. Stocks looking weak BEL, Escorts, Max Health, SBI, PowerGrid, VBL and Sun Pharma.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)

STOCK PICKS

Heritage Foods Ltd

Heritage Foods Ltd is an India-based dairy company. The company’s segments include dairy, renewable energy, and feed. The company is focused on building a range of milk and milk-based value-added products to serve the needs of traditional as well as next-generation consumers. The dairy segment is engaged in the manufacturing and marketing a complete range of milk and milk products. The renewable energy segment produces power for captive consumption through its solar and wind power plants. The feed segment is engaged in the manufacturing of wide varieties of cattle and fish feeds. The company’s milk products include toned milk, double toned milk, A2 full cream milk, UHT milk, cow milk, full cream milk and slim milk. Its fat products include cow ghee, cooking butter, buffalo ghee, table butter, fresh cream and Hi aroma ghee.

Its value-added products include curd, butter milk, flavoured milk, sweets, cheese, lassi, milk shakes, cold coffee, paneer, and whey drink. The company’s ice cream products include tubs, bars, kulfi, family packs, cones, cups, and juicy bars. Heritage Nutrivet Ltd is a subsidiary of the company. The company supplies dairy farmers with high-quality livestock feed and feed supplements. Heritage Novandie is a 50:50 JV between Heritage Foods and Novandie Foods. The company aims to bring a range of delicious yogurt offerings to consumers through its brand Mamie Yova. With fixed assets strength of over Rs1,000 crore (one of the highest in listed Indian dairy companies), the stock is good buy at current levels for a target price of Rs650 in medium term.