Are HUL, Infy, RCom stocks still good buys?
Several stocks, such as Hindustan Unilever (HUL), Reliance Communications (RComm), Infosys and others that have appreciated up to 100% and more over the last six months. Do they still remain good buys, or should smart investors book their profits and move to other counters?
Hindustan Unilever has moved up 45% since April. “We recommend to book profits and maintain a cautious stance on the stock,” said Vikas Inder Jain, assistant vice-president, retail research, Religare Securities.
The scrip closed at Rs 686 on the BSE on Thursday.
IT giant Infosys has gained 24.13% since April 26. The stock closed at Rs 2,916 on Thursday.
Among telecom stocks, Reliance Communication has been one of the major outperformers in the segment. The stock, which has gained 140% since April, closed at Rs 137 on Thursday. “One can continue to hold the stock,” said Jain.
Fast-moving consumer goods or FMCG stocks may be the silver lining because of their defensive nature in an uncertain economic environment, said experts.
“Market participants are looking at companies that have predictability in earnings and therefore, we have seen buying emerging in these kinds of stocks,” said Vishal Jajoo, senior research analyst, Nirmal Bang.
“ITC is a classic candidate,” he added. “The earnings surge continues to be strong in the core cigarette business and there has been significant improvement other areas.”
Jajoo is bullish on the stock.
“We expect the surge to continue on the back of sustainability in earnings and the fact that the downside seems to be protected,” he said.
And it’s not just the biggies, the defensive nature of FMCG stocks seems to be helping companies such as Agro Tech Foods as well.
“The new launches and planned facilities from Agro Tech Foods should augur well for the company,” said Jajoo. The stock has the potential to appreciate from current levels, he added.
Among other stocks, Tech Mahindra, which has gained near 30% on the bourses in the last two months, may turn out to be a good bet in the long run.
“Post its merger with Satyam Computer Sevices, the new entity, Tech Mahindra, will emerge as the fifth-largest IT company in India. This will boost the stock,” said Sahil Kapoor assistant vice-president, retail capital markets, Edelweiss Financial Services.
“The stock appears to be in an uptrend and would continue to rise further.” Kapoor added.
Wockhardt is another stock that should be avoided in the short term, said Jain. “Wockhardt has been in continuous decline since the last few months. One should avoid the stock for the short term with respect to its current uncertainty and regulatory overhang.” The scrip has fallen 68% since April.