Benchmarks slip 8% in February! 16 stocks to buy from value and quality themes amid volatility in March

The Indian markets have been trading volatile amid geopolitical tensions and rising crude oil price. Nifty and Sensex have dropped more than 10 per cent from their highs in October. As of March 4, benchmarks have corrected nearly 8% in the last one month alone.  

Overall, February turned out to be a highly volatile month dominated by geopolitical risk. 

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While the broader market adopted a more cautious approach during the month, Mid and Small Caps declined by 8% and 10% respectively over the same period.  

Among sectors, except the Metal index which was up 8% by the month end, all sectors ended Feb’22 on a negative note. The current concerns over prolonged periods of geopolitical uncertainty may increase oil prices further and thereby accentuate the prevailing inflation problem, feels brokerage Axis Securities. 

Rising crude remains a worry 

Oil prices rebounded on Friday as the disruption of Russian oil exports because of western sanctions outweighed the prospect of more Iranian supplies from a possible nuclear deal. Brent crude futures for May rose to as much as $114.23 a barrel and were at $113.72, up $3.26, or 3% in the early trade on Friday.  

"A scenario of oil sustaining above $100/bbl for some more time will create notable challenges to the oil-importing countries, especially India, which may find it difficult to maintain the trade deficit and the foreign exchange reserves," says Axis Securities in its report.  

The rise in crude prices could also delay the cool-off in inflation in the domestic market which was earlier expected to moderate in the second half of 2022. 

Global developments to pose short-term challenges 

March22 is expected to be an eventful month marked by the FED meeting, state election results, and LIC IPO.  

Axis Securities feels global developments such as the direction of the oil prices, bond yields, and Dollar Index along with the development of the current geopolitical events surrounding Russia and Ukriane will pose short-term challenges for Indian markets.  

Saying earnings will be key, the brokerage is of the view that volatility is there to stay for some time and value and quality themes will perform going forward.  

Stocks to buy in March 

Based on the above themes, Axis Securities has identified 16 stocks from large cap, mid cap and small cap categories to buy in March.  

Large cap stocks to buy in March: ICICI Bank; Bajaj Auto; Tech Mahindra; Maruti Suzuki India; State Bank of India; Hindalco Industries; Bharti Airtel; 

Mid cap stocks to buy in March: Federal Bank; Varun Beverages; Ashok Leyland; National Aluminium Company; Bata India 

Small cap Stocks to buy in March: Krishna Institute of Medical Sciences; Equitas Small Finance Bank; Praj Industries; CCL Products (India).

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)