What to do with Natco Pharma, M&M, Bharat Dynamics and 3 other stocks? Aamar Deo of Angel One decodes

Markets and the benchmark indices continue to witness selling pressure, with consecutive 5 months of negative closing, on the back of weak quarterly earnings, India’s GDP growth slowdown, relentless FII selling and global tariff war scenario, Aamar Deo Singh, Senior Vice President-Equity, Commodity & Currency at Angel One highlights. This analyst spells-out strategy in previous week’s major movers viz. Bajaj Auto, Avenue Supermarts (DMart), Adani Green Energy and three more stocks. Excerpts:

Nifty witnessed its third weekly fall and ended with declines of 0.6% this time. What does the chart suggest and the levels one should watch out for in Nifty and Bank Nifty?
Overall, markets and the benchmark indices continue to witness selling pressure, with consecutive 5 months of negative closing, on the back of weak quarterly earnings, India’s GDP growth slowdown, relentless FII selling and global tariff war scenario. From the highs since September 2024, the benchmark indices have corrected by 13%, clearly indicating the decline in investor sentiments.

We have been witnessing a sell-on-rally market for the past many months, and that trend continues to hold as of now. Going forward, Nifty has very crucial support around the 22,500-22,700 zone, any consistent breach below this zone could lead to a further sharp correction in Nifty.

On the upside, immediate resistance for Nifty is seen around the 23,000-23,200 zone, and sustaining consistently above this zone will be the first sign that bears have capitulated and bulls are gaining in strength. As far as Bank Nifty is concerned, support is seen around the 47,700-47,800 zone, while resistance is seen around the 49700-50000 zone.

Nifty is down over 16% (in USD terms) which is suggestive of moderation in valuation and more than 50% of the companies are currently trading below their 5-year average PE multiples. Do you see a potential value buying opportunity and which stocks do you prefer?
Overall, markets generally tend to overreact, be it in times of exuberance or be it in times of pessimism. In the current market scenario, where both indices and many stocks have corrected in double digits, investors seem to be in double minds whether to invest or wait it out. Given that equities as an asset class have outperformed most of the other asset classes by a wide margin, over the long-term, the current correction can be seen as an opportunity to add onto quality stocks, with a minimum of 3–5-year time horizon.

Valuations have cooled off in many sectors and stocks, and savvy investors have started their hunt for bargains. But at the current juncture, one should invest in tranches, and focus more on financials, IT & Pharma sectors, to name a few.

Metals and energy stocks were outliers, witnessing significant positive action. As the March 12 timeline for implementation of the 25% tariff on steel and aluminium gets closer, we could see some action in metals. What should the investors do in both these sectors?
Investors should ideally be cautious in these sectors as once the Trump tariff kicks in, it could lead to both demand and supply disruptions across the world, and India too could witness a dumping of steel from major suppliers including China.

The benchmark Nifty Metal index ended with gains of over 5% last week, as investors attempt to downplay the risks posed by the tariffs, as India is not likely to be directly very much affected by this tariff war. Those long in metal stocks should look at booking profits wherever possible, while it would be prudent to wait for the outcome, before initiating fresh long positions at the current levels.

What is your view on PSU stocks, especially public sector banks which have fallen by up to 34% in the past one year?
Amongst the banking space, PSU Banks have been significantly beaten as compared to the private sector banks, with the Nifty PSU Bank Index down by almost 9% YTD against 1% correction in the Nifty Private Bank Index. Overall, investor sentiments appear to be more favourable towards the large-cap private sector banking names as opposed to PSU Banks with the exception of SBI.

Overall declining growth trends, concerns regarding NPAs, future credit growth and rising competition with private sector banks, all make the current and future challenging economic scenario for the PSU Banks, are making investors rethink about investing in PSU banks. Going forward, one needs to be selective in this category.

What is your view on Elon Musk’s entry into India through Tesla and Starlink and the impact on the Indian auto sectors and telecom sector?
Tesla’s entry into India is sure to heat up the competition both in the auto sector as well as the telecom sector. India’s EV sector is also witnessing competition from M&M, Tata Motors, Maruti Suzuki, Hyundai, Kia, MG Hector & BYD, all slugging it out. With the Indian market being extremely price sensitive, and it being a key trigger for adoption, it would be interesting to see the pricing that Tesla offers in India but given that it has a premium image tag associated, how buyers react to the same, will define the future of Tesla in India.

In the telecom space, Starlink’s technological edge, giving it the leverage to provide high-speed internet even in remote and underserved areas, has all the potential to bridge the digital divide in India. It will be interesting to see how the well-entrenched players, the likes of Jio & Bharti Airtel, react to this competition. But one thing is clear, consumers are surely to benefit out of this, no doubt about that.

Though the market sentiments remain subdued, there were some really big gainers like Godrej Industries, Bikaji Foods and NLC India while Natco Pharma, M&M and Bharat Dynamics were among the worst losers. What should investors do with them?
Despite markets remaining subdued, stock specific action remains unabated, and the last week was no different. Amongst the stocks that handsomely rewarded its shareholders, included the likes of Godrej Industries which was up almost 40% WoW, Bikaji Foods was up 17% WoW and NLC India was up 15% WoW.

Investors should look at booking part-profit in these stocks and can trail the balance below key support levels, 1027, 625 & 211 for Godrej, Bikaji & NLC respectively.

On the sell side, Natco Pharma continued to witness sell-off for the second consecutive week, with crucial support seen around the 750 levels. M&M & Bharat Dynamics were other stocks that witnessed sharp selling, correcting by 9% & 8% respectively WoW. Investors can hold onto these 2 stocks, with support seen around 2600 levels & 940 levels for both these stocks.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)