As the benchmark Nifty has corrected around 10% from its peak, brokerage house Sharekhan believes that the current weakness in the market provides an opportunity to buy quality stocks as current uncertainties are temporary.  

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Inflation, high crude oil prices and recent geopolitical risks may result in near-term volatility in broader markets. Despite the above concerns, Nifty FY22E/FY23E/FY24E EPS remain stable with upgrades concentrated towards upstream oil & gas companies, it says.  Corporate earnings are also expected to gradually pick-up in H2FY23 supported by a recovery across most sectors, likely improvement in rural demand and higher discretionary spending given pent-up demand as the third COVID-19 wave fades.

"We believe that current uncertainties are a temporary phenomenon and India’s medium-to-long term economic growth outlook (8% plus GDP growth) remains intact given a recovery in private/public capex, infrastructure spending and accommodative RBI policy even in inflationary environment," it said.

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As per sharekhan around 56% of Nifty companies have beaten earnings estimates, while 30% missed them as Nifty companies grew by 24% y-o-y during Q3FY22.  

"Automobiles, cement, FMCG and chemicals face margin pressures due to high input costs and thus price hikes remain key to a recovery in margins, especially for consumption sectors," says Sharekhan.  

24 stocks to buy in falling market

Based on Q3FY22 earnings and India's medium-to-long term economic growth outlook, Sharekhan has indetified 24 stocks to buy ranging from small cap, midcap to large cap stocks.

Large-caps stocks to buy: Reliance Industries Limited (RIL), L&T, ICICI Bank, SBI, Titan, Divi’s Labs, UltraTech, Bajaj Auto, Infosys, HDFC Ltd and DLF.

Midcap stocks to buy:  Mahindra  Lifespaces, Tata Elxsi,  Jubilant  Foodworks,  Polycab  India, Vinati Organics, Century Ply, Amber Enterprises.

Small-cap stocks to buy: NOCIL, Globus Spirits, Mastek, KPR Mill, HCG and Balrampur Chini.

Meanwhile, key risks remain slower-than-expected earnings in FY23/24 and possible pause/downgrade in consensus earnings estimates with global uncertainties, geo-political tension and input-cost pressure on rising inflationary trends across most sectors.

(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.)