stock picks: What to do with BSE, HUDCO and 4 other stocks? Om Ghawalkar of Share.Market recommends this

Nifty witnessed its worst monthly fall in February at 6% and its placement on charts is far from being satisfactory. If the situation does not change this week, will you recommend the “remain invested” mantra or go for holding cash till there is some semblance of a bottom?
The Nifty 50 experienced its worst monthly decline in February 2025, falling by 6%, with the index closing at 22,135. This marks the fifth consecutive monthly drop, reflecting ongoing market weakness driven by weak corporate earnings, elevated valuations, and persistent foreign outflows.

Broader indices like the Nifty Microcap 250 (-11.26%) and Nifty Smallcap 250 (-10.20%) bore the brunt of the sell-off, while sectoral indices like Nifty IT (-11.28%) and Nifty Media (-11.42%) were among the worst performers.

On the charts, Nifty’s placement remains uncertain, with the index down 15.62% from its September 2024 peak. Technical levels suggest a critical support zone around 22,000; a breach could lead to further downside.

Despite these challenges, the Bank Nifty (+0.58%) and Nifty Financial Services (+2.89%) showed resilience.

For investors, the “remain invested” mantra holds merit for long-term wealth creation, as history shows markets eventually recover from even severe corrections.But, given the lack of clarity on the bottom, holding some cash for tactical opportunities may be prudent. Focusing on fundamentally strong sectors like banking and financial services while avoiding speculative bets is advisable until signs of stabilization emerge.Investors should closely monitor global cues and domestic earnings trends to make informed decisions in the coming weeks.

What are the levels to watch out for in Nifty and Bank Nifty?
Nifty 50 closed at 22,135 on February 28, 2025, marking its fifth consecutive monthly decline amid intense selling pressure.

• Support Levels: 22,000 (psychological), 21,800 (key downside trigger), and 21,000 (long-term support).
• Resistance Levels: 22,300–22,600 (short-term reversal), 23,000–23,100 (50-week EMA), and 23,442 (critical resistance).
• Indicators: Nifty remains below key moving averages; RSI is oversold but bearish.

If 21,800–22,000 holds, a bounce is possible; otherwise, 21,000 may be tested. Caution is advised.

Bank Nifty closed at 48,344.70 on February 28, 2025, with key support and resistance levels dictating short-term movement.

• Support Levels: 48,240–48,200 (immediate support), 47,800–47,750 (strong support zone), and 47,500–47,400 (long-term support).
• Resistance Levels: 48,600–48,700 (short-term breakout level), 49,000–49,100 (20-day moving average), and 49,500–49,600 (critical resistance).
• Indicators: Bank Nifty remains within a consolidation range; a breakdown below support may extend the downside.

If 48,200 holds, a bounce toward 48,700–49,100 is possible; otherwise, 47,750–47,400 may be tested.

If we look at the markets we can only see a sea of red with all sectors/segments getting punished severely. Is the time for theme-based investment over at least in the near-to-medium terms and should one look only for stock specific opportunities?
Given the uncertain sectoral trends amid global economic challenges, theme-based investing may take a backseat, making stock-specific opportunities more attractive.

Investors should focus on resilient sectors like banking and financial services, where companies with strong fundamentals, robust earnings visibility, and limited exposure to global uncertainties are likely to outperform.

Prioritizing firms with solid balance sheets, steady revenue streams, and minimal geopolitical risks can provide stability and growth potential in a volatile market.

In this environment, a bottom-up investment strategy centered on high-quality stocks with strong earnings potential is expected to yield better returns than broad sectoral bets.

Under the current circumstances, if you have to pick your top five long term ideas, which will be those?
Given strong government support and India’s robust growth trajectory, the following sectors are expected to perform well:

• Banking & Financial Services – A resilient sector driven by strong credit growth and stable asset quality.
• Green Energy – Backed by government incentives and a target of 500 GW capacity by 2030, making it a high-growth opportunity.
• FMCG – Rising disposable income post-Budget 2025 is likely to boost consumer spending.
• Capital Goods – Benefiting from increased infrastructure spending and manufacturing expansion.
• Infrastructure – Government initiatives focused on large-scale projects and urban development enhance sector potential.

IT, auto and pharma were among the worst performing sectors in February and their plight has to do more with Trump reciprocal tariffs and state of the US economy. What would be your strategy in these three sectors?
In February 2025, the IT (-12.53%), Auto (-10.36%), and Pharma (-7.58%) sectors were among the worst performers due to concerns over US President Donald Trump’s proposed 25% reciprocal tariffs on imports. These tariffs threaten profitability, global competitiveness, and supply chains.

IT Sector: With 60% of revenues coming from the US, rising costs and weaker demand pose risks. Investors should focus on firms with diversified revenue beyond the US and strong automation strategies.

Auto Sector: Tariffs on auto imports and rising steel/aluminum prices could inflate production costs. Domestic-focused companies and those investing in EVs may offer better resilience.

Pharma Sector: With 31% of exports reliant on the US, pricing pressures and regulatory scrutiny strain profitability. Companies with strong domestic sales and high-value product pipelines should be prioritized.

India’s GDP grew at a faster pace in Q3 propped by higher government spending and as the Chief Economic Adviser V Anantha Nageswaran highlighted, consumption increased significantly because of Maha Kumbh. Do you think the momentum will pick up from here and we could see a positive rub-off in consumption related themes?
The recently concluded Maha Kumbh Mela 2025 in Prayagraj has emerged as a powerful economic catalyst, contributing an estimated ₹3 lakh crore to India’s economy. With over 65 crore pilgrims participating, the event not only reinforced faith and cultural unity but also drove consumption and employment across multiple sectors.

The Uttar Pradesh government allocated Rs 7,500 crore for infrastructure development, including roads, flyovers, and sanitation. With an economic impact of Rs 3 lakh crore, the event delivered an astounding 40x ROI, making it one of the most economically efficient global events.

• Tourism & Hospitality: Hotels, homestays, and restaurants witnessed revenue surges exceeding Rs 40,000 crore.
• Transportation: Over 1,500 special trains by Indian Railways contributed Rs 20,000 crore, while ride-hailing and bus services added Rs 16,000 crore.
• FMCG & Retail: Sales of religious items, food products, and souvenirs crossed ₹25,000 crore, with daily essentials adding another Rs 20,000 crore.
• Employment: Over 12 lakh temporary jobs were created across construction, hospitality, logistics, and event management.
• Healthcare: Medical camps and clinics saw a boost, driving pharmaceutical sales and healthcare services.

Chief Economic Advisor V. Anantha Nageswaran highlighted the event’s role in increasing Q3 FY25 consumption demand, with India’s GDP growth accelerating to 6.2% from 5.6% in Q2, contributing up to 1% of overall GDP growth.
Though the market sentiments remain subdued, there were some winners as well like Home First Finance, Chola Finance and Craftsman Automation while RR Kabel, BSE and HUDCO were among the worst losers. What should investors do with them?

We can answer this by checking factor scores for these stocks using our Share.Market-powered research, which evaluates them across five key factors: Momentum, Value, Sentiment, Volatility, and Quality.

Each stock is scored out of 5 on these factors, helping investors assess price trends, fair valuation, market perception, risk levels, and financial strength. By using these insights, investors can make informed decisions and identify strong opportunities in the current market.

Home First Finance Company India Ltd.

• Momentum: 3/5
  The stock shows moderate momentum, indicating steady but not strong upward movement.
• Value: 3/5
  Fairly valued, suggesting it is neither overvalued nor undervalued.
• Quality: 2/5
  Below-average quality, reflecting weaker financial health and operational performance.
• Volatility: 5/5
  Low volatility indicates stable price movements with minimal fluctuations.
• Sentiment: 3/5
  Neutral sentiment, suggesting a balanced outlook from investors and analysts.

Cholamandalam Investment & Finance Company Ltd.

• Momentum: 3/5
  The stock shows moderate momentum, indicating steady but not strong upward movement.
• Value: 2/5
  Somewhat expensive, suggesting it may be overvalued relative to its fundamentals.
• Quality: 2/5
  Below-average quality, reflecting weaker financial health and operational performance.
• Volatility: 5/5
  Low volatility indicates stable price movements with minimal fluctuations.
• Sentiment: 4/5
  Analysts are bullish, showing positive investor sentiment and expectations.

Craftsman Automation Ltd.

• Momentum: 2/5
  The stock is an underperformer, showing weak price movement.
• Value: 2/5
  Somewhat expensive, suggesting it may be overvalued relative to its fundamentals.
• Quality: 4/5
  Strong financial health and operational efficiency indicate good quality.
• Volatility: 5/5
  Low volatility suggests stable price movements with minimal fluctuations.
• Sentiment: 2/5
  Analysts are bearish, signaling cautious market sentiment.

R R Kabel Ltd.

• Momentum: 1
  The stock has very weak momentum, suggesting underperformance.
• Value: 3
  A moderate value score suggests the stock is fairly priced relative to its fundamentals.
• Quality: 5
  A high-quality score reflects strong financial health and operational efficiency.
• Volatility: 5
  Low volatility indicates stable price movement with minimal fluctuations.

BSE Ltd.

• Momentum: 5
  The stock shows strong momentum, indicating a sustained upward trend.
• Value: 1
  A low value score suggests the stock is highly expensive.
• Quality: 5
  A high-quality score reflects strong financial health and operational efficiency.
• Volatility: 2
  Moderate volatility suggests noticeable price fluctuations.

Housing and Urban Development Corporation Ltd. (HUDCO)

• Momentum: 1
  The stock exhibits weak momentum, indicating underperformance.
• Value: 5
  A high value score suggests the stock is significantly undervalued.
• Quality: 5
  A strong quality score reflects solid financial health and operational efficiency.
• Volatility: 2
  Moderate volatility suggests noticeable price fluctuations.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)