Markets have fallen sharply over the last few weeks, thanks to rising interest rates. There are many high quality Sensex stocks that are trading below their 200 day moving averages and investors can now buy into them.
This has been a top Sensex performer generating decent wealth for investors over the last 2 to 3 decades. However, over the last few months, the shares have seen a stark under performance. The 200 day moving average of HDFC Bank is Rs 1509 and the stock is now trading at Rs 1317. The stock is also way below its 52-week high of Rs 1700.
While one does understand if the downside is due to some structural changes, but, that has not been the case. HDFC Bank has fallen because its is heavily owned by Foreign Portfolio Investors and they have been selling the stock on account of rising interest rates. Most brokerages have a buy on the stock of HDFC Bank and some have price targets of more than Rs 2000 on the stock. The stock is likely to generate returns for investors over the next few years.
The stock of HDFC Bank was quoting at Rs 1317 on the BSE.
In the case of Bajaj Auto, the stock is below the 200 day moving average of 3609. The current market price of Bajaj Auto is Rs 3497. One of the reasons for the fall in the stock has been falling vehicles sales. Investors also remain worried over rising input costs for the sector. The stock of Bajaj Auto is available with a dividend of Rs 140 per share. This means post the dividend, the acquisition costs of the shares would be closer to the Rs 3350 levels, which is not a bad price to pay. The stock is also available at a price to earnings ratio of 15 times trailing EPS, which makes it not very expensive. What makes the stock an attractive buy is also that at the current price the dividend yield translates to 4%. Shares of Bajaj Auto were last seen trading at Rs 3497.
Housing Development Finance Corporation
This stock has been beaten down by FPIs as they had massive holdings in Housing Development Finance Corporation (HDFC) and they are now exiting the Indian markets. Like HFDC Bank, the parent is a superb stock to own, because it has corrected sharply. The 200 day moving average on the stock is 2609 and the stock is now available at Rs 2157. The last 2 months have seen relentless selling pressure in the stock of HDFC.
The company recently announced a merger with HDFC Bank and HDFC shareholders would now receive shares of HDFC Bank after the merger. Many analysts believe that the merger would EPS accretive from day 1 of the merger. In the more longer term basis HDFC is a solid franchisee stock to buy. After the fall in the stock price the shares are attractive and are very close to the 52-week lows. The stock is also currently available with a dividend Rs 30 per share, which means your cost of acquisition reduces ever further. All of the three stocks mentioned above are worth considering given the sharp fall in their share prices.