Muhurat Trading 2022: What should your stock picking strategy be on Monday?

Stock Strategy by Nikhil Kamath, Co-Founder, True Beacon, & Zerodha for Diwali Muhurat Trading 2022

1. 5 investment themes for Muhurat Trading

Banks – A healthy outlook for credit growth and reduced concerns over asset quality could lead to an increase in bank profitability.

Automobiles – The entire automotive industry is expected to see a CAGR growth of 7% due to increased demand for cars/trucks and increased government focus on infrastructure. This fiscal year, Nifty Auto is up more than 20% year-to-date, primarily due to better growth on a favorable base and lower input prices, leading to improved margins.

Lodging – Residential property prices in India are on an upward trajectory. Housing supply in the previous quarter reached its highest level in seven years. Thus, real estate stocks can also be considered in this Muhurat buying session.

Gold – Indians are known to buy gold during the festive season. And it is also widely used as a hedge against inflation/currency risk. Banks offer gold ETFs and government gold sovereign bonds – good opportunities for people looking to diversify their portfolios.

Index funds – Indian markets have shown great resilience so far and are certainly among the best investment avenues for foreign investors. People can invest in index funds if they have a similar view and don’t want to invest in multiple stocks.

2. Why should investors invest in Muhurat trading?

Muhurat trading has sentimental value (as it is a ritual) in our country, and it depends on individual investors and their beliefs to trade during this time. According to Koyfin data, Nifty returns have ranged from -3% to 39% (Diwali x to Diwali x +1) over the past 7 years. Thus, there is no concrete evidence of uniform returns on investments made during Diwali.

Muhurat trading is a regular practice of Indian investors and people who usually buy stocks for the long term, as they believe that any financial activity done on this day during Diwali brings wealth, prosperity and success.

3. What should the stock picking strategy be?

During Muhurat trading hours, since people believe in long-term investing, it is recommended to consider prevailing macroeconomic conditions and invest in companies with good earnings, fundamentals, management, etc.

4. Major sectors to bet on Muhurat trading, factors to keep in mind when reviewing Muhurat trading.

If you are an investor who prefers to be part of this tradition, it would be a good idea to deploy a fraction of your capital to buy stocks based on current market conditions. Given current demand and market conditions, a few investment sectors would likely be banking, consumer staples, automotive, and real estate.

Stock Strategy by Kanika Agarrwal, Co-Founder, Upside AI for Diwali Muhurat Trading 2022

1. 5 investment themes for Muhurat Trading

Macro headwinds have been talked about by every pundit in every form of media in the world! Therefore, Buffett’s maxim of being greedy when others are scared applies best today. There is merit in being contrarian in these markets and good non-intuitive bets should pay off well in the long run. For example, gold remains an excellent choice as a hedge against equities, currencies and inflation.

Many good government bond opportunities will present themselves in the next quarter. The US government just released savings bonds at 9.62%! The most gold-plated credit rating available at 9.62% also gives you an idea of ​​what you could potentially find in Indian sovereign debt. Within stocks, we pick pharmaceuticals, IT, BFSI and autos for the next quarter.

2. Why should investors invest in muhurat trading?

There is no rational reason to invest in muhurat trading. It’s entirely psychological. The tradition of the muhurat trade is inherently Indian. In the markets, you live and die by facts and figures, but once a year you pray to the gods that the zero-sum game of the stock market is unleashed in your favor!

We exchange during muhurat for this same reason – to collectively participate in the hope for the next year. Other than that, you should buy more stocks than you believe you will hold for the long term during muhurat trading.

3. What should be the stock picking strategy during muhurat trading?

Within stocks, we pick pharmaceuticals, IT, BFSI and autos for the next quarter. We do not play on themes of consumption or raw materials. Generally, everything we buy is with a long-term perspective, so the fundamentals of the companies we invest in remain strong.

4. Factors to keep in mind when considering muhurat trade

Numerically, 11 of the last 15 muhurat sessions have closed in the green, so muhurat can be a good day for traders. Perhaps there is a case for “hope arbitrage” where you can go long at the start of the session and close positions at the end of the trade.

But a green muhurat day does not imply a good year. Therefore, the lessons of sound investing continue to apply. Do not use leverage, buy fundamentally good companies and invest for the long term.

Stock Strategy by Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities for Diwali Muhurat Trading 2022

1. 5 investment themes for Muhurat Trading

Taking into account all economic and market developments, we present the following topics for SAMVAT 2079:

• Housing and banking will be major themes to watch in 2023, given their improving economic outlook and the resumption of credit growth. Moreover, affordable housing could even benefit from a new impetus in the next budget.

• The consumer space is experiencing a strong recovery and many categories are normalizing to pre-Covid levels with a slight structural uptick in several sub-segments. The QSR space is well positioned to deliver superior yields.

• Demand momentum in the CV segment is expected to continue and we expect the CV cycle to maintain momentum, driven by the recovery in economic activities and the government’s focus on infrastructure

• With a recovery in real estate and housing demand, the home improvement theme has strengthened and continues to be robust in 2023.

• Travel and tourism is shaping up to be a more promising theme, which has gained further momentum after a resumption of the vaccination campaign.

2. Why should investors invest in muhurat trading and what should their strategy be?

Muhurat trade is a special trading window opened during the auspicious day of Diwali reflecting the nuances of Indian culture. It is a very old tradition practiced by investors with great enthusiasm and faith. Additionally, investors believe it will bring prosperity and enlighten wealth and financial well-being. Investors should take advantage of this opportunity to invest in long-term Diwali muhurat ideas.

3. Best long-term investment options for muhurat trading

Based on the themes above, our core long-term Diwali picks are: ITC, Ashok Leyland, Polycab, Sundaram Finance, Indian Hotels, IDFC First bank, Westlife development, NOCIL and Aptus Value Housing.

4. Considering the current market scenario, which sectors would be best to choose for muhurat trading

Investors (domestic + foreign) have proactively shown their confidence in India’s long-term growth story. Moreover, this belief has only strengthened over the past 3-4 months, which is evident in the market structure shifting towards domestically oriented themes that are well supported by the country’s strength in as an economy of domestic consumption. We have also seen profitability slowly shift from commodity producers to commodity consumers over the past quarter. As a result, domestically oriented themes such as banks, domestic industrials, consumer staples, autos, hospitals and consumer discretionary have outperformed cyclical + export-oriented themes since the bottom. of June. We expect this trend to continue in the coming quarters.

5. The best stocks to buy

Based on the themes above, our core long-term Diwali picks are: ITC, Ashok Leyland, Polycab, Sundaram Finance, Indian Hotels, IDFC First bank, Westlife development, NOCIL and Aptus Value Housing.

Disclaimer: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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