While the Nifty is down 10% from its October 2021 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, highlighted domestic brokerage Motilal Oswal in a note.
“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% as compared to its 10-year average, demonstrating the two-faced nature of the index on valuations,” the note added.
Motilal Oswal has shared its preferred midcap and smallcap stocks which have corrected at least 20-30% from the 52 week highs. The brokerage highlighted its top stock picks in the space after the recent stock market correction which include Canara Bank, Jubilant Food, SAIL, Ashok Leyland, Dalmia Bharat, Zee Entertainment, Whirlpool India, ICICI Securities, GR Infraprojects, Zensar Tech, Mahanagar Gas, Transport Corporation.
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, it said.
“If the Russia-Ukraine conflict elongates and leads to elevated energy prices for longer, it may impact earnings estimates. 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 largecaps,” the brokerage added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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