Stocks to Buy | Market Outlook & Investment Strategy with Sandip Sabharwal

Sandip Sabharwal points out that the US dollar is currently entering a new phase of decline, potentially falling another 5 to 7%. He notes that historically, such a weakening dollar tends to be bullish for emerging market equities. Sandip expects this to attract capital flows into emerging markets over the next few months, supporting their performance.

Sandip Sabharwal highlights that although markets are not cheap, this is typical in a bull phase. He emphasises that corrections create opportunities to buy quality stocks. Sandip sees sharp corrections as unlikely in the near term, so waiting for a steep dip could result in missed opportunities. His advice is to buy on dips and remain invested.

Sandip Sabharwal explains that the anticipated foreign outflow of approximately $840 million due to MSCI and FTSE weight reductions was already factored in when the maximum foreign holding was adjusted. Sandip notes that Eternal benefits from being part of the main index and shows a high correlation with its movements. However, he expresses scepticism about the returns from its investments in quick commerce, which Sandip expects to be low over the coming years.

Sandip Sabharwal comments that an early onset of the monsoon can negatively impact demand for summer-related products, including power consumption. He says early monsoon rains might reduce power demand and push merchant power prices lower. Sandip emphasises that the crucial factor will be the rain spread and intensity during July, which is essential for crop sowing and yields.

Sandip Sabharwal advises investors who are already invested to hold their positions unless their stocks have weakened fundamentals. For those looking to buy, Sandip cautions against waiting for sharp corrections that are unlikely in the near future. He points out that macroeconomic indicators suggest stability, so the recommended approach from Sandip is to buy quality stocks at valuations one is comfortable with and stay invested.

Sandip Sabharwal notes that Sun Pharma faces near-term challenges due to increased spending and slower growth, so the stock may consolidate without significant rallies soon. Regarding Divi’s, Sandip says that despite concerns about a decline in some product lines next year, the company is balancing those with new deals. While valuations are stretched, Sandip believes Divi’s remains in a relatively good position.

Sandip Sabharwal generally prefers to avoid heavy investments in commodity sectors, including metals. Although many metal companies have delivered decent results, Sandip remains cautious and is not actively investing in this space at the moment.

Sandip Sabharwal explains that the commercial vehicle sector has been in a moderate growth or downturn phase, but could see positive surprises as the economy improves and interest rates fall. He highlights Mahindra & Mahindra’s expected benefit from strong performance in tractors and SUVs. Sandip also notes Hyundai has lost market share due to a lack of new models, while Maruti and M&M are expected to perform well. He sees commercial vehicle companies potentially emerging as the dark horses in this space.

Sandip Sabharwal observes that Balkrishna Industries is entering the truck, bus radial, and passenger car tyre markets, which are lower margin and highly competitive compared to its existing high-margin off-highway tyre segment. He points out that building a brand and gaining OEM and replacement market share will be challenging, likely affecting valuations negatively in the near term.

Sandip Sabharwal notes that stocks like BPCL and HPCL have seen strong moves recently. However, he cautions that any rise in crude prices or fuel price cuts could introduce volatility. Sandip believes most bullishness appears to be priced into these stocks currently, so investors should be cautious.

Overall, Sandip Sabharwal maintains a positive market outlook with cautious optimism. He recommends focusing on quality stocks and sectors with solid fundamentals while monitoring macroeconomic trends such as the US dollar movement and monsoon progress. Sandip advises buying on dips, as sharp corrections are unlikely, and using sector-specific insights to guide selective investment decisions.


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