Budget 2022 Stock Picks: Ajit Mishra of Religare Broking recommends HUL, Dabur, Bajaj Auto among 10 top stocks for budget

Ajit Mishra, VP Research at Religare Broking said that participants have high expectations as always and expect the budget to benefit sectors such as agriculture, infrastructure, FMCG, auto, and pharma.

Mishra has over 17 years of experience in equity market research. Before joining Religare, he was associated with SMC Group as a senior technical analyst.

In an interview with Zeebiz's Kshitij Anand, Mishra said that amongst economy-related sectors, one may consider stocks like L&T, PI Industries, Rallis India, Coromandel, HG Infra, Asian Paints, HUL, Dabur, Bajaj Auto, and TVS Motors.
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Q) Tracking US Fed jitters Sensex, and Nifty50 fell more than 1.5% ahead of the Budget week. How do you see markets in the coming Budget week?

A) Markets are likely to remain volatile in the Budget week, in continuation to the prevailing consolidation phase. Global headwinds have already been weighing on the sentiment which may subside gradually.

However, we have some important earnings like DLF, Tata Steel, Tata Motors, HDFC & ITC, and data like auto sales and manufacturing PMI & services PMI are also scheduled during the week, which may add to the choppiness.

Q) Based on the January expiry, how do you see markets in the February series? Which are the important levels to track?

A) Markets have been trading in a broader range (16,800-18400) for the last three months and currently hovering around the medium-term support zone (100 EMA) on the daily chart.

Broadly, we expect Nifty to oscillate within the 16,600-17,600 zone and either side's decisive break would trigger the next directional move.

In case of a breakdown, 16,400-16,000 zone would act as crucial support. On the higher side, 18,000-18,400 would be tough to break in the February series.

Q) Should one consider buying post the Budget Day to avoid volatility and clarity?

A) Volatility makes traders’ life difficult however investors get the opportunity to invest in quality stocks at good bargains.

We strongly advocate using these correction phases and bouts of volatility to accumulate stocks in a staggered manner.

Q) FIIs remain net sellers for more than Rs 30,000 cr in the cash segment of Indian equity markets – what is causing the panic – is it the US Fed or Budget 2022?

A) FII has been net sellers in the secondary market for CY21 largely due to stretched valuation, slower economic growth, and inflation concerns.

Besides, the Fed announcement of rate hike starting March, as well as the upcoming Budget 2022, may keep the flow of funds uneven in near future.

However, we believe that they would return to D-Street on robust earnings, better valuation, and long-term growth prospects of India which is still attractive among the emerging markets.

Q) In terms of sectors, banks, and auto managed to outperform and IT and Realty stocks tumbled. What led to the price actions? What is causing panic in the IT space?

A) The IT sector had seen a decent run-up as it was one of the sectors which benefited the most due to Covid-led restrictions and adoption of work from home(WFH) culture.

Also, the realty sector saw improvement due to higher demand post reopening of the economy.

Going ahead, there is still a good scope of growth in both the sectors but premium valuation and correction in the global tech majors leading correction.

From a long-term perspective, investors can start buying selected midcap and large-cap stocks in the IT and realty space.

Q) Any Budget picks that investors can look at?

A) Participants have high expectations as always and expect the budget to benefit sectors such as agriculture, infrastructure, FMCG, auto, and pharma.

Amongst these sectors, one may consider stocks like L&T, PI Industries, Rallis, Coromandel, HG Infra, Asian Paints, HUL, Dabur, Bajaj Auto, and TVS Motors.

(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.)