8 Nifty Stocks Trading Below 200-Day Moving Averages, Should You Buy?

Markets are once again trading weak, as investors look to the monetary policy announcement scheduled for June 8. Several stocks have plummeted over the last few weeks, defying averages. Here are 8 Nifty stocks that are trading below their 200 day moving averages.

Stocks trading below 200 day moving averages?

Stock name	Current market price	200-day moving average
TCS	3366	3520
Infosys	1510	1646
HUL	2222	2279
HCL Tech	1020	1112
Asian Paints	2757	3055
Nestle India	16663	18043
Tata Steel	1072	1180
Tech Mahindra	1127	1135

Should you buy the stocks of TCS, Infosys, HCL and Tech Mahindra?

From this list, we have as many as 4 stocks from the IT Space. Now, let us tell you what is happening with IT stocks and why the sharp fall. One of the reasons is that interest rates are headed higher and there is absolutely no doubt about that. Investors remain concerned that sharp rise in interest rates in the US would lead to stalling economic growth, which would lead to lower IT spends, which is why some of the stocks have fallen. If you see some of the IT stocks, their valuations are still higher in terms of price to earnings, which does not make them great to buy. However, our contention would be that the falling rupee, could lead to better margins for some of these companies. Stocks like Infosys are attractive stocks to buy also for their dividend yields. We believe that investors should stick to shares of Infosys, as stocks like TCS are expensive and Wipro has very tepid growth rates.

Buy the stock of Tata Steel and avoid the stock of Asian Paints

Some of the other stocks that are trading below their 200-day moving averages are the stocks of Tata Steel and Asian Paints. Tata Steel valuations are inexpensive at 4 times price to earnings. However, the problem right now is steel prices are coming-off, which could have an impact on margins. However, the companies shares are available with stock split benefits, as well as a dividend of Rs 51 per share. So, really to that extent the cost of acquisition of Tata Steel shares is reduced. The other reason to be buying the Tata Steel stock is that the company has been paying back debt, and if steel prices continue to remain elevated, the company would surely be repaying back more debt.

Avoid the stock of Asian Paints

One of the top reasons for the fall in the stock of Asian Paints is that Grasim Industries will venture into the paint business and it has doubled its capex for paints business as well. The company has also announced that it is expecting to start paint production from Q4FY24. Now, this is certainly not good news for Asian Paints, which has a significant market share. In fact, it is the dominant player in the paints business. Apart from this crude prices are rising, which is impacting inputs costs. We believe that the stock is very expensive at the current levels and its premium is justified. However, the premium can be justified only to an extent. The stock commands very hefty valuations. We suggest selling the stock of Asian Paints, rather than buying.

Disclaimer

Investors are advised caution as the markets have become exceedingly volatile. Neither Greynium Information Technologies, nor the author, would be responsible for any losses based on a decision reading the above article. Every effort has been made to provide accurate information and readers should understand the inherent risks before investing in the markets. The author owns shares in Tata Steel.