HRITHIK stocks may continue to outperform: Amar Ambani of Yes Securities1 min read . Updated: 01 Nov 2019, 12:52 PM IST
- Despite the Sensex hitting new highs, the midcap and smallcap stocks are yet to join the party
- The BSE midcap and smallcap indices are still flat to negative for this year
The Sensex on Thursday hit a new high of 40,392, overtaking June highs. From the start of this year, the index has delivered a decent return of about 12%, driven by gains in select largecap stocks, popularly known as HRITHIK stocks.
HRITHIK is a popular acronym for HDFC Bank, Reliance Industries, Infosys, TCS, HDFC, ITC and Kotak Mahindra Bank and these stocks have a large weightage in benchmark index Nifty.
Amar Ambani, head of research at institutional equities at YES Securities, expects these group of stocks to do well despite their sharp run-up.
"In the recent past we’ve seen that HRITHIK stocks have outperformed. We expect a similar trend to continue," he said.
Despite the Sensex hitting new highs, the midcap and smallcap stocks are yet to join the party. The BSE midcap and smallcap indices are still flat to negative for this year.
Amar Ambani says the broader market is in a consolidation phase that began in 2018 and may likely last till mid-2020.
"Furthermore, each time Nifty has retraced from 12000-plus levels, sharper fall witnessed in midcaps and small caps. Any sharp correction will likely cause a bigger fall in the broader market, even from their current beaten down valuation levels," he adds.
Yes Securities has a one-year target for Nifty of 12,330. Its "best-case target stands at 12,915 but with high chances of a steep fall, which may even pull back Nifty to sub-11000," says Amar Ambani. Key monitorables include the global situation, math of fiscal deficit, rupee movement (specifically pursuant to any US-China trade war escalation) and ongoing stress in real estate, SMEs and NBFC sector, he added.
Amar Ambani attributed the current leg of rally in Indian markets to bearish outlook for oil and commodities in general, above-average monsoon and government’s intent on more reforms.