Why experts are bullish on IT, metal stocks in bear-hit stock market today?
6 min read 28 Feb 2023, 12:34 PM ISTStocks to buy today: US dollar has been rising against Indian National Rupee (INR), which is providing window of opportunity for export oriented IT and metal companies
PremiumStock market today opened flat and finally bulls succumb to bear pressure for eighth straight session on Tuesday deals. Market experts believe that strong US dollar has forced investors to switch money from equities to forex market and hence Dalal Street and other global markets are reeling under sell off heat these days. They said that rising US dollar rates have created some avenue for revenue to export oriented Indian companies, especially in IT and metal sector. Hence, they advised positional investors to indulge in bargain hunting in IT and metal segment and add quality stocks from IT and metal sector stocks for short term.
Speaking on stocks to buy today in current bear-hit stock market, Anuj Gupta, Vice President — Research at IIFL Securities said, "Indian stock market is under pressure due to rising US dollar price in the forex market. Due to this steep rise in US dollar rate, equity investors are switchign money from equities to forex market and this trend is expected to continue in near term till outcome US Fed FOMC meeting scheduled from 15th to 16th March 2023 becomes public. However, in this rise in dollar price, falling Indian National Rupee (INR) has created an opportunity for the export-oriented IT and metal companies as they are expected to get margin benefit due to rise in US dollar price against Indian rupee."
On other reasons that makes IT and metal stocks hot favourite in this bear-hit stock market today, Santosh Meena, Head of Research, Swastika Investmart said, "Because banking companies outperformed significantly in 2022 while the IT sector lagged significantly, we are now witnessing some tactical changes from banking to IT names. While rising US bond yields continue to be a barrier for IT companies, investor apprehension over a significant US recession is waning, which is causing some value purchasing in the sector."
Santosh Meena said that a stronger dollar index is acting as a headwind, but metal stocks are volatile because they have a tailwind from Chinese economic development. Investors must be choosy in each industry as a result of the volatility until the market has clarification over the peak interest rates in the USA.
On why you should buy IT and metal stocks in this stock market crash, Arvinder Singh Nanda, Senior Vice President, Master Capital Services said, "IT and metal industries have historically demonstrated resilience to economic downturns, including bear markets. Even during challenging times, businesses still need technology and infrastructure, which means that demand for IT and metal products and services remains relatively stable."
US dollar vs INR
Master Capital expert went on to add that the falling rupee against the US dollar is another reason that is making Indian IT and Metal stocks profitable, particularly export-oriented ones. Although rupee depreciation makes it expensive for metal companies to import raw materials, exports will be encouraged.
Stocks to buy today
On IT and metal stocks that one can buy, Swastika Investmart expert said, "Our top picks in the IT sector are HCL Tech and Cyient, and Jindal Steel appears to be a rather solid investment in the metals industry while Jindal Steel appears to be relatively strong in the metals sector."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
