Market Veterans Pick Key Themes Ahead Of Muhurat Trading

Emerging trends, especially defence, and some of the dominant players struggling because of raw material shortages could be good bets to consider while picking stocks for Muhurat trading this year, according to three market veterans.

Investors can keep in mind the developments in the defence sector, Safir Anand, an independent investor; and Deepak Shenoy, founder of chief executive of Capitalmind, said in a Twitter Spaces conversation with BQ Prime's Niraj Shah.

Gurmeet Chadha, managing partner and chief investment officer at Complete Circle, also suggested global market picks, citing the recent correction.

Anand suggests there could be companies that were displaced by market factors. Like those that faced raw material front problem but were otherwise dominant in their position.

Good stocks being battered in the market in the ongoing earnings season is also an opportunity, according to Anand. “It could be companies that are down you know 10%, 12% on their result day and you may find an opportunity to add some of them if you believe that the raw material prices and other issues will be resolved by the next quarter,” said Anand.

These could be companies that have already undertaken capex, particularly as interest rates rise, and the cost of capital may have dented their annual reports, according to Anand. Or because of all the problems in the world, this capex gas not really translated into a meaningful sale in terms of high margins, he said. "You will find great capacities available cheaper and therefore you can bet on some of those themes.”

One key themes to watch for is defence, said Anand and Shenoy.

“We started off thinking that the defence order book would be small and it would largely be industrial explosives and packed explosives," Shenoy said. "But not only are they getting orders in hand grenades, rocket ammunition, aerial command centre, one of the new drones they have [at the Defence Expo] can actually carry loads up to 4 kg.”

“What's important here is you have to look at orders, not just the current order book but the order execution year wise, what are the long-term orders like in year five or six years," he said. "There are milestone payments to orders and working capital can become a bit of an issue.”

Shenoy is bullish on something he calls ‘maha trends’, things that have changed India in a way that we couldn't have imagined before.

“There is a major trend in UPI, which has changed the way India transacts. There's ONDC, which is coming up as a very big trend. There is a massive change in logistics worldwide, and also in India," he said. "Within India, whether it is road transport, rail transport with a dedicated freight corridor, linked with ONDC, or the logistics provisioning that is happening in in various fronts, I think India is in for a very, very big changes. These are of course the larger trends over there."

Shenoy sees the growing popularity of financialisation within the country where people are investing more into financial assets rather than real estate and gold.

“About 75 or 80% of our stocks sit either straddling or particularly focused on some of these themes," he said. "We're also adding Indian consumption… but I'm playing this for a five- or six-year period.”

The remaining parts of the portfolio, they said, would be shorter term, focused on interesting opportunities that could be realised in the next one to two years.

Anand said he is bullish on banking theme as well, based on the performance so far.