- Here’s what analysts said about assessing Indian stocks
- Volatility has fallen from a record high over the past few trading sessions although volumes remain thin

Nifty companies will start
announcing earnings for the quarter ended March 31 from mid-April
As analysts struggle to
assess India Inc.’s corporate earnings and debt-servicing capabilities amid the
nationwide lockdown due to the coronavirus pandemic, they have begun relying on
alternative indicators to inform their investment recommendations.
Equity analysts speaking in
interviews with Bloomberg highlighted measures ranging from volatility and cash
levels to less conventional factors including daily infection numbers. So far,
the drop in analyst price targets for the NSE Nifty 50 Index has trailed the
actual slump in the stock gauge.
Market participants
appeared more optimistic on Tuesday as China reported no new coronavirus deaths
for the first time, with India’s broader S&P BSE Sensex Index posting its
best day since May 2009. Volatility has fallen from a record high over the past
few trading sessions although volumes remain thin. A total of 5,351 people in
India have been infected with 160 deaths, according to data compiled by Johns
Hopkins University.
Nifty companies will start
announcing earnings for the quarter ended March 31 from mid-April. The lockdown
imposed on March 25 has slowed down an economy already set for its weakest pace
of growth in 11 years, and a panel of Indian government ministers on Tuesday
advised the country’s prime minister to partially lift stringent curfew
measures.
Here’s what analysts said
about assessing Indian stocks.
Look at Volatility
The India NSE Volatility
Index is inversely related to the Nifty, “clearly showing if Vix declines we
could see some reversal in the correction," said Amar Singh, head of
advisory at Angel Broking Ltd. “Ideally below 40 would be a great sign of
relief."
Singh said that investors
should also watch for a further appreciation in the rupee. “Once it starts
trading below 74 levels, we might see a likewise bottom in the equity
market."

Dip in Infections
Manishi Raychaudhuri, head
of Asia Pacific equity research at BNP Paribas, said signs of containment of
the Covid-19 outbreak, particularly in developed economies, is a key factor
being watched. “The number of daily incremental infections (particularly their
day-on-day change) is an important data point," he said.
BNP Paribas has not changed
its an end-2020 target of 44,500 for the Sensex. The French bank is
recommending defensive sectors such as consumer staples as well as those
benefiting from a decline in commodity prices and an appreciation in the U.S.
dollar such as IT services exporters.
Cash Levels
Investors should focus on
stock-specific factors such as levels of cash and cash equivalents, said Joseph
Thomas, head of research at Emkay Wealth Management. “Under conditions of fall
in business volumes and lockdowns, companies which have cash and which do not
have heavy debt will find the going relatively more smooth," he said.
“Companies with a
competitive market share tend to be less affected as they are leaders and they
are bound to be back in the saddle as soon as things improve," he noted.
Fund Participation
“There are some fund
managers who are not working actively" as trading volumes for cash
equities, futures and options thin, said Kranthi Bathini, director at
Wealthmills Securities Ltd. If cash volumes rise, that may be “a good
indication" of a comeback, he said.
“Mutual fund data will also
be an important watchpoint to see whether that liquidity remains," he
added.
Technical Levels
“Looking purely at
technical charts I would not summarize that the bearish phase of the markets is
over," said Manish Hathiramani, proprietary trader and technical analyst
at Deen Dayal Investments.
The Nifty could fall to
7,500, and if it rises, “the next level to watch out for would be 9,050,"
he said. “We must spend a couple of days at those levels. I am not referring to
a touch and go situation. If we spend time around those levels it will mean
sufficient volumes are being traded."
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