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How To Position Your Portfolio After 7.3% Knock On The Sensex?


The Sensex has lost almost 7.3% from its 52-week high of 62,245 points to the current levels of 57,700 points. The markets are extremely volatile and could slide even further should the omicron variant cause havoc.


Here is how you should now position your portfolio post the dip?

Emkay Global says in its latest report that it remains biased toward structural themes of capex revival (infrastructure, corporate capex and residential real estate), pick-up in discretionary consumption (post-unlock demand, festive season) and exports.

"We maintain significant overweight on Banks and Autos/Ancs, Infrastructure (Cement, Power, Engineering & Cap Goods) and Pharma sectors, while we maintain our significant UW on Consumer Staples," the firm has said.

"However, in view of potential headwinds such as Covid/Omicron uncertainty, inflationary trends (supply issues, margin vs. volume trade-off), temporary softness in rural consumption, impending uptick in global/domestic bond yields, tapering by the US Fed, and the strengthening dollar, we make tactical changes to our large-cap model portfolio to add more defensiveness," the brokerage has said.
Therefore, it would be a good idea to raise defensives in an investors portfolio. "We have raised the weightage of Insurance, IT services and Telecoms sectors, by marginally reducing the weightage of NBFCs, Metals, Oil & Gas and Consumer Staples. We do not think that Consumer Staples provide robust defensiveness given: 1) rural softness; 2) input cost inflation; and 3) elevated valuations, supported partly by lower bond yields. We, however, maintain our bullish view on consumer discretionary names, as we believe that they stand to benefit from structural trends in the long term (penetration and GDP growth, formalization, premiumization), and full-unlocking plus festival/wedding demand in the short term," the brokerage has said.


Key changes to the portfolio stance of Emkay Global

  • Banks [300 basis points overweight maintained]: 50bps weight shifted from IndusInd Bank to Kotak Mahindra Bank. SBI remains the largest overweight (100bps), while Axis Bank remains an equal weight. We also have Equitas SFB in the EAP SMID.
  • Autos [300bps overweight maintained]: 50bps shifted from Motherson Sumi to Bajaj Auto. We have OW on all the stocks except for M&M. In the SMID EAP, we have TVS Motor (new launches, EV upside, exports), Bharat Forge and Apollo Tyres.
  • Cement, Engineering & Cap goods and Pharma: No changes. Overweight maintained.
  • Consumer: We are bullish on consumer discretionary names in EAP Nifty (Titan, UBBL) as well as in EAP SMID (Varun Beverages, Westlife, ABFRL, TCNS Clothing). Inox Leisure was added to the EAP-SMID in November.
  • IT services: Now an equal weight vs. marginally underweight earlier. The underweight position on TCS was reduced to 50bps from 150bps, in view of the rating upgrade (to Buy) by Emkay IT analyst (Dipesh Mehta).
  • Other changes: 50 basis points shifted from Shriram Transport Finance (NBFC) to HDFC Life (Insurance). 50bps shifted from Hindalco (Metals) to Bharti Airtel (Telecom). BPCL remains an OW (+50bps) but has been removed from our large-cap conviction list.

High-Conviction List

Large-Caps (Overweight ): Eicher Motors, ICICI Bank, Infosys, Maruti Suzuki, and SBI

Clearly, Emkay Global likes some of the big banks in the country apart from stocks like Infosys.

How To Position Your Portfolio After 7.3% Knock On The Sensex?

Read more about: stocks to buy
Story first published: Friday, December 3, 2021, 15:35 [IST]
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