The Sensex is down 10.83 per cent and the Nifty is down 10.57 per cent so far in 2022, and both the indexes are within 2% of their all-time lows. The Indian rupee touches a life low of 78.28 against the dollar amid geopolitical tensions like benchmark 10-year bond yield hitting 7.60 per cent, policy tightening by the United States Federal Reserve, rising inflation, interest rates in the economy. and others are leading the market to remain under a major correction and despite heavy volatility, here are three stock picks that short-term investors can buy to profit from bearish market conditions.
Relaxo Footwears Limited
Relaxo is India’s largest footwear manufacturer, and its product mix includes Hawaii and the Bahamas, which contribute 25% (60 percent of shoes and 40% of sandals) to total sales revenue, while Flights and Sparks account for 37% of total sales. are part. Axis Securities has given a Buy Call rating to the shares of Relaxo with a target price of 1100, and chose Relaxo as my top pick of the week.
According to Axis Securities, the company’s Q4FY22 performance was particularly weak for the open footwear category (around 75-80% of Relaxo sales). On a positive note, its discontinued footwear reported strong improvement due to the opening of schools, colleges and work offices. We are confident that with the revival of the rural economy, a significant stalled demand will release, which will benefit the company’s operating performance going forward.
Normal monsoon forecast, recent announcement of hike in MSP, and higher remittances will be the key catalysts aiding the revival of the rural economy, which, according to the brokerage, will kick-start the overall consumption cycle of the second half.
“Hyper-inflation in the prices of key raw materials, coupled with weak volume growth, is putting pressure on profits. However, we believe the company’s margins are likely to continue to grow as operating leverage is triggered by pick-up in volumes and market share increases from unorganized/small players. Relaxo has maintained healthy operating cash flow and asset diversion. In addition, its strong EBITDA margin over the years has made it one of the most capital-efficient businesses in the industry. We believe that a strong balance sheet with zero net debt and efficient working capital will help Relaxo prosper in the long run,” Axis Securities said in a note.
ELGI Tools
For shares of ELGI instruments, brokerage firm Ventura Securities has said that the stock price has risen from 103 (October 20) to 423 (February 2022), creating a series of higher bottoms and higher tops. Since November 21, the stock has attracted a substantial amount of backed positive buying.
The brokerage says that the firm uptrend from October 20 suggests a strong bull grip in the stock and recently the stock gave a range breakout and made a high of 420 with supportive volume.
ADX, PVT and MACD indicators suggest the possibility of a strong move and are potential targets 600, Ventura Securities said in its note.
If the stock price corrects to the downside, the buy level is (395-380) -368- (355-347) and the stop loss to be seen in the trade is 310, the brokerage said.
NOCIL LTD
Ventura Securities said the stock price rose from 44.70 (March 20) to 321 (October 2021), creating a series of higher bottoms and higher tops and the stock was trading consistently above average during the move. The stock then corrected lower top and lower bottom to 191 (February 2022) and a steady uptrend from 44.70 (March 20) to 321 (October 21) suggested continued buying interest, the brokerage said.
Ventura Securities said that the stock recently gave a range breakout from the previous highs of 253 and 262 with support volume as well as higher highs of 274 and Arun Up/Down, PVT, KST and MACD indicators in the coming days. suggest the possibility of a strong move.
Possible targets are 325-400-450 and if the stock price corrects to the downside then buy levels are (255-242)-232- (223-217), the brokerage said while placing the stop loss 205 level.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.