Markets have fallen a great deal with the Nifty down almost 6.5% in the last 6 trading days. This has opened-up some opportunities to nibble into stocks. Before we tell you about these stocks, it would be good to tell you where we believe the markets could be headed.
Short term fall is likely
The markets are likely to fall in the short term, if domestic institutions led by mutual funds do not support the falling market. Interest rates in the US are definitely going higher and some clarity would emerge on how fast and how soon on Wednesday, after the US Fed Meet. Global markets have fallen largely on the back of worries over the faster than expected rate rise in the United States. This has led to some selling pressure by Foreign Portfolio Investors in India and we expect the trend not to change too much. Here are 2 stocks to buy after the sharp fall in the Sensex and the Nifty.
This stock has almost halved from 52-week high levels of Rs 1052 to the current market price of Rs 609. The unlocking of the injectables business is likely to create value for shareholders and could be a big trigger for the stock.
Aurobindo Pharma is the second largest player in the pharma industry in India and the largest generics Company in the US.
There are many positive aspects of the company looking ahead. The biggest of these could be the large number of ANDA filings that are in the final stage of approval. This would mean that there would be robust growth and addressable market in the future. Apart from this, the company is focused on R&D investments that are directed towards complex and speciality products. Revenues from speciality products include things like Biosimilars, Vaccines, Inhalers etc. There are aggressive plans to scale up the injectibles business. The company aims to reach $650-$700 million of global injectable revenues by FY25. We believe that the stock is undervalued and the sharp fall of 6% in the stock on Monday leaves investors with an opportunity to buy. The stock is now trading at a reasonable p/e of just 10 times one year forward earnings.
One stock that can be a good bet against the sharp fall in the markets is the stock of REC. This is a large infra finance player, particularly in the power sector. Most of the funding is done to the power sector and since it is to state owned enterprises, the company has not witnessed great NPA issues.
The biggest draw for the company stock is the dividend yield of more than 8% that it offers. The stock is trading at a price to earnings multiple of barely 3 times and below the book value as well. We believe that if you would like to balance your portfolio a bit with dividend yielding stocks, whose downside is limited, the REC stock could be a good bet. Buy the stock for long-term gains.
Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and is family do not hold shares in any of the above companies.