Time To Buy These High Quality Stocks That Have Come Crashing Down

Markets had a bad week with the Nifty falling to a new 52-week low and the indices seeing their worst week since May 2020. Here are a few stocks that are good to buy after the market carnage.

ICICI Securities

The shares of ICICI Securities has come crashing down from levels of Rs 896 to Rs 440. This means the stock has halved in the last few months. In fact, there has been no severe downturn in fundamentals of the company. One of the top reasons to buy the stock is the dividend yield. The company in FY 2021 declared a dividend of Rs 24 per share, which takes the dividend yield on the stock to 5.45%. Now, with the stock having fallen sharply, the price to earnings ratio on the same has fallen to 10 times trailing EPS. We believe that the company can report much better numbers going ahead. ICICI Securities is unlikely to be impacted by cost pressures and inflationary conditions given that the company is a service oriented firm, largely deriving income from broking activities. We believe that the stock offers good dividend yield, has fallen sharply and price to earnings multiples are low, which makes it a good buy at the current levels. The stock of ICICI Securities last closed at Rs 440 on the National Stock Exchange.

CESC

The company is one of the top players in power distribution, transmission and generation. The shares of CESC have also fallen sharply, in line with the markets, which has made the stock attractive to buy. Like ICICI Securities, one of the top reasons to buy the shares is the attractive dividend yield that it offers. Last year, the company offered shareholders a dividend of Rs 4.5, which on the current market price takes, the dividend yield on the stock to 6.5%. The shares which are trading at Rs 71.35 are also very close to their 52-week lows. For the FY 2022, CESC reported an EPS of Rs 61.6, which takes the p/e to 11.6 times on a trailing basis. We believe that the company would continue to do well and report good growth in the coming years, which makes the stock good bet at the current levels, especially those who are looking to invest with a time frame of 2-3 years.

Buy in small quantities and on declines

Globally as well as domestically equity markets saw carnage in the last couple of trading sessions as central banks across the world make aggressive rate hikes and its impact on economic growth. Nifty almost corrected by almost 18% from its peak and is entering the bear phase. Further delay in monsoon, persistent FIIs selling and rising Covid cases have also dented sentiments. India VIX has inched higher and is trading around 23 levels which indicates volatility likely to continue for now. "Going ahead, we expect market to remain under pressure with increasing fears of economic slowdown. Given the hawkish commentaries from Central banks and record high inflation, rate hike cycle is likely to continue over the next couple of months and would keep investors jittery. Traders should avoid long positions and maintain Sell on rise strategy," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.