Apart from the fund manager’s skill, a hidden factor that explains such return differences is the investment styles in which each fund is managed. Right now, many of the funds that have managed to top the charts with a 16% return are value-style funds, while the laggards are growth-oriented ones.
Around this time last year, we had analysed the FMCG sector’s March 2022 quarter earnings. At the time, the sector was grappling with twin headwinds of a demand slump and rising input costs. Valuations were still expensive. Most FMCG players have declared their results for the March 2023 quarter.
SEBI (Securities Exchange Board of India) has levelled charges of front-running against two big institutions that may Indians are invested with – LIC and Axis Mutual Fund. Front running and its close cousin – insider trading – were quite widely prevalent in the days of yore, before SEBI drafted elaborate regulations to keep such practices at bay. But what do today’s investors need to know about these malpractices? Here’s an explainer.
It has been a rough ride for the Indian API industry in the past 2 years. A combination of factors including price erosion in US generics, destocking, demand fluctuation, elevated raw material costs and freight costs have hit the margins of many API plays including market favourites such as Divi’s, Laurus and Aarti Drugs. Their growth has also remained at low single digits in this period.
Still, if a company has managed to remain resilient in this period and yet corrected to valuations that make it attractive, it deserves to be noticed.
Mankind Pharma, which operates in the domestic pharmaceuticals space, opens its Rs 4300 core IPO today. The issue is priced at a band of Rs 1,026 – Rs 1,080 per share of face value Re.1/-.
A 14% fall in INFOSYS (INFY) in just a week is not something that you expect, especially when the index itself fell under 1% over the same period. But then, when markets are disappointed, they don’t cry, they rage.
Picking a stock in the pharma space is not easy. The businesses are complex and can leave you feeling like you are preparing for a mini-MBBS. What’s more – no two companies are alike. To compound matters, it is also a heavily regulated space (and rightly so) with complex supply chains very often, heavily reliant on China. Not only do most end products have names that sound like tongue twisters but can be governed by complex patent regulations.
When markets make merry, many stocks have seemingly compelling stories even for entering at peak valuation. And the market is fine with stretched valuations to accommodate such stories. In other words, every market-favoured stock appears to scream – buy me at any price.
But when challenges emerge, the same market starts reacting so sharply that investors who bought into the story midway start making losses. Yes, there isn’t a bigger disaster for stock market investors than earnings and PE multiples contracting together.
The recent furore surrounding the failure of Silicon Valley Bank in the US has exposed that while banking is a favourite sector with stock market investors, the fragility of the banking business is far from well-understood. Banks are held up as the engines of economic growth. Whichever sector grows, the banking sector ultimately gains. Banks are also accorded a higher valuation than most sectors during bull phases. In good times, banks made up a 40% plus weight in our leading stock market indices.
In February last year, we had issued a buy call on the stock of a premier fashion player housing a vast number of national brands. The steps this company had taken to expand its offering range, a return of focus on margins, and the consumption promise all propelled the call. the stock rallied handsomely as well, post our call.
However, owing to two factors, the stock has since given up nearly 40% from its high and is currently about 25% below our original call price.
Indian markets have corrected about 10% (Nifty 50) from the last peak in December 2022. But many stocks have fallen much more than the bellwether index. This has provided an opportunity to revisit some of our recommended stocks – to either identify averaging opportunities or move them to a BUY from a HOLD.
When we published our equity market outlook for 2023, we had mentioned where pockets of opportunity could be found. The correction the market is going through provides fertile grounds for stock picking. So here, we tell you how to pick stocks in 2023, in those pockets that we had noted. We do this using our Stock Screener.
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