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9 Bluechip Stocks Trading Below 200 Day Moving Averages, Should You Buy?
The Sensex and the Nifty have crossed new record highs, with analysts optimistic on a further upside potential. With the Monetary Policy now out of the way analysts are looking at further upside for the markets.
Wipro
The stock of Wipro is trading at Rs 406, which is below the 200 day moving averages of Rs 457. Shares of most IT companies have seen a sharp fall over the last 6-months on fears of a possibility of a recession in the US. There has been some slowdown and retrenchment in the IT sector abroad, with not too much emphasis on the Indian markets. The stock of Wipro has hit a high of Rs 729, which means the fall in the stock has been rather dramatic.
Tech Mahindra
This is another tech stock that has seen its share price fall sharply. Again, it is the same reason of a tech slowdown. The 200 day moving averages of the stock is Rs 1157. Slowdown in the US on account of fears of recession could have an adverse impact on the performance of the company. Having said that the stock has also dropped in tandem. JM Financial recently had a buy call on the stock of Tech Mahindra with a price target of Rs 1180.
Divis Laboratories
This stock dropped to a 52-week low of Rs 3195, following a poor set of quarterly numbers. The current market price of the stock at Rs 338, is way below the 200 day moving average price of Rs 3842. Analysts at ICICI Securities downgraded the stock from 'BUY' to 'HOLD'. In fact, most analysts believe that it would take sometime for recovery in the stock. It would be interesting to watch the next few quarters of the stock before arriving at a decision.
Life Insurance Corporation
The shares of the company which came out with an IPO this year have been languishing way below the IPO price. The stock of LIC is currently trading at Rs 654, which is just above the 100 day moving averages. We do not have the 200 day moving averages as the company got listed towards the middle of the year. After good Q2 quarterly performance, Motilal Oswal remained optimistic bullish on the stock of LIC citing reasonable valuations. The brokerage firm has given a buy call with a target price of Rs 870, implying substantial gains from the current levels.
Other stocks trading below 200 day moving averages
Several other bluechip stocks like Oracle Financial Services. Aarti Industries, Jubilant Foodworks and Gujarat Gas are trading below their 200 day moving averages. Sector rotation is being witnessed in the market. "Stock and sectors which have run up recently like IT, real estate, Auto, Private banks, metals are seeing some profit booking while the laggard sectors like FMCG, infra, cement are catching up. IT stocks which have seen a sharp run up in the last 2 months could come under pressure in near term. Most Indian IT services companies derive around 30-40% revenues from the BFSI segment, which off late is seeing some weakness. According to news reports, some of the large US and European Banks are planning to lay off people in view lower revenue projection next year," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
