The Economic Times
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| 17 March, 2025, 10:52 AM IST | Today's ePaper
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    These large-caps have ‘strong buy’ & ‘buy’ recos and an upside potential of more than 25%

    When 2024 dawned, the bulls were ruling and it appeared nothing could go wrong with the stock markets. Did the year end the same way? Now, three months into 2025, it appears as if nothing right can happen. So, it’s good to know that even when the bulls are in control, you can never write off the bears. What gives bears the biggest fuel is any global currency market adjustment. So, always keep one eye on the currency markets. That is where you will see minimum absolute volatility but maximum relative volatility. The first hint of change will come from the Dollar Index. As when there is a reversal, the first tranche of money is likely to flow to bluechips. So have them on your watch list and stop getting influenced by the short-term movement of prices.

    These large-caps have ‘strong buy’ & ‘buy’ recos and an upside potential of more than 25%

    Do you think rationality goes out of the window only when the bulls are rampant and stocks of bankrupt companies quote at valuations of over half-a-billion dollars? Think again. In bearish phases like the one we are witnessing today, the same thing happens. Stocks get punished for no logical reason. Consider what the street did to pharma stocks last week just because it heard the words “reciprocal tax”. It feared the US would impose reciprocal tariff on pharma products, little realising that our pharma exports are at the core of keeping healthcare costs low in the US. No administration would want to push costs higher. In extreme times, stock prices make us believe street narratives and ignore reality.

    These large-caps have ‘strong buy’ & ‘buy’ recos and an upside potential of more than 30%

    Volatility is back, so is the fear of another round of correction. But before worrying about what’s happening on the street, understand that, at this point, what is causing volatility is mostly not about India – it is about emerging and currency markets. It might not appear to be significant here, but for global investors, the Chinese currency, Renminbi, moving below 7.30 to the US dollar last Friday was a big deal. It also pushed the rupee lower against the dollar. For a hedge fund, whose game is based on arbitrage, these moves are significant and make a big difference in the gain or loss they make on their investments. So, while monitoring Dalal street, keep one eye on the currency market. Because any indication that the storm has passed will come from there.

    Stocks in news: ITC, HDFC Bank, Adani Wilmar, Kotak Bank, HUL

    Union Bank reported a 2% YoY increase in its domestic deposits from the previous year at Rs 11.82 lakh. Sequentially, it was down 2%.

    These large-caps have ‘strong buy’ & ‘buy’ recos and an upside potential of more than 25%

    The way 2024 is ending for large-caps is very different from how it began. At the start of the year, large-caps were mostly seen as stocks that had failed to deliver returns. The reason for this perception was the much better performance of mid- and small-caps. But in the last few months, large-caps have been able to cover some of the valuation differential with mid- and large-cap stocks. But if one looks at the long-term average, there is still scope for mean reversion. As an investor, even in a bull market, it is better to be prepared for volatility. So a part of any incremental exposure should go to large-cap stocks. But make a distinction between large-caps and what are mega-caps. In short, there is more to large-caps than TCS, Infy, and Reliance.

    Controversies come & go, focus on business: 6 large-cap stocks from different sectors with an upside potential of up to 35%

    For all those rattled by the latest Adani row: Allegations under the Foreign Corrupt Practices Act (FCPA) or investigations by the US SEC have taken place against other global corporations in the past. But does all this affect a domestic diagnostic company that has finally felt the positive impact of a takeover it executed some time back? Or, for that matter, a construction and engineering major which expects government spending on infrastructure to restart now that the dust of elections has settled? The answer clearly is no. So focus on businesses more than anything else.

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