Winning Strokes

On last Friday, there was mayhem in the Indian bourses. Taking cues from the overall US markets the Sensex closed at 58,840.79, down 1,093.22 points (-1.82%), while the Nifty closed the day at 17,530.85, down a whopping 346.55 points (-1.94%). Photo: YouTube

The US stock market suffered huge losses in the past week on a surprisingly hot CPI inflation report as well as some grim earnings reports or warnings from the corporate world. The major indexes gapped below their 50-day moving averages and undercut some further key levels on Friday. Many leading stocks also struggled.

In such a situation it will be natural to see the Nifty opening Gap Down today and testing 172000 on the downside. The traders are suggested to refrain from any trade at least during the 1st one hour. Later carefully studying the markets they can take limited bets on the either side of the fence.

However, some stocks like D B Realty Ltd (Rs.108.80) may hit another buyer freeze. 

I feel at the moment you need to be long o two sectors:

Construction: The monsoon is going to end in the next couple of months and starting of full fledged Construction activities. 

During the last few years, the budgets have been focused on increasing infrastructure capacity. One critical measure is to accelerate highway construction.

A Business Standard, report of 27 August, 2022 says that road developers have healthy order books, which means consistent revenues for the next three fiscal years. In 2021-22, the NHAI awarded over 12,000 km of road in 127 new projects, a 22% increase year on year (YoY). There were 62 HAM (hybrid annuity model) projects and 63 EPC projects.

Road construction has been quite robust, with an average of 28.6 km per day, being rolled out in 2021-22. But this was slower than the previous year's 36 km per day. Interestingly, the PM Gati Shakti National Master Plan commits to increasing the award to 25,000 km in 2022-23. If this happens, then order book will guarantee revenue until 2025-26.

Moreover, the real estate prices have started to inch up in select metros and Tier - 1 cities. Hence, you need to pick up good Construction Company stocks and keep holding.

Wind Energy: Investors should focus on the renewable energy sector, which has enormous potential in the future as climate change protocols become more shrill.

Wind energy looks promising in the renewable energy basket after the Indian government agreed in principle to halt electronic reverse auctions of wind power projects.

In the renewable energy sector, e-reverse auctions have largely been used to determine the lowest tariff, resulting in historically low bids.