Muhurta Trading 2022: What should be your stock-picking strategy on Monday?

Stock Market Strategy for Diwali Muhurta Trading 2022 by Nikhil Kamath, Co-Founder, True Beacon and Zerodha

1. 5 Investment Themes for Muhurta Trading

Bank – A healthy outlook on credit growth and easing of concerns over asset quality could boost profitability for banks.

Automobile – The entire auto industry is expected to witness a 7% CAGR growth due to the increasing demand for cars/trucks and the increasing focus of the government on infrastructure. Nifty Auto has gained over 20 per cent year-on-year in this fiscal, mainly due to better growth on the back of a favorable base and improving margins on the back of a fall in input prices.

Accommodation – Residential property prices in India are on an upward trend. Housing supply hit a seven-year high in the last quarter. So, realty stocks can also be considered in this Muhurta buying session.

Sleep – Indians are known to buy gold during the festive season. And it is also widely used as a hedge against inflation/currency risks. Banks offer Gold ETFs and Government Sovereign Gold Bonds – great opportunities for those looking to diversify their portfolio.

index fund – Indian markets have shown great resilience so far and are certainly among the top investable opportunities for foreign investors. People can invest in index funds if they have a similar opinion and do not want to invest in multiple stocks.

2. Why should investors invest in Muhurta Trading?

Muhurta trading carries sentimental value in our country (it is a ritual), and it depends on the confidence of individual investors and their trading during this time. According to Coifin data, the returns of Nifty in the last 7 years have been in the range of -3% to 39% (Diwali x to Diwali x+1). Hence, there is no concrete evidence of the same return on investment made during Diwali.

Muhurta trading is a regular practice done by Indian investors and those who usually buy stocks for a longer period as they believe that any financial activity done on this day during Diwali brings wealth, prosperity and success. .

3. What should be the stock picking strategy?

During Muhurta trading hours, since people believe in investing for long term, it is recommended to consider the current macroeconomic conditions and invest in companies with good earnings, fundamentals, management etc.

4. Top Areas to Bet on Muhurta Trading Factors to Keep in Mind While Considering Muhurat Trading.

If you are an investor who likes to be a part of this tradition, it would be wise to invest a fraction of your capital to buy stocks based on current market conditions. Considering the prevailing demand and market conditions, some investable sectors would probably be banking, FMCG, auto and realty.

Stock Market Strategy for Diwali Muhurta Trading 2022 by Kanika Agarwal, Co-Founder of Upside AI

1. 5 Investment Themes for Muhurta Trading

Macro headwinds have been talked about by every expert in every form of media in the world! Therefore, Buffett’s theory of being greedy when others are fearful is best applied today. These markets have merit in being contrarian and good non-intuitive bets should pay off well over the long term. For example, gold remains a great pick for equities, FX and as an inflation hedge.

The next quarter is set to see a lot of good government bond opportunities. US Government Issued Savings Bonds At 9.62%! The highest gold-plated credit rating available with 9.62% gives you an idea of ​​what you can potentially get in debt in India too. In equities, we are choosing pharma, IT, BFSI and auto in the next quarter.

2. Why should investors invest in Muhurta Trading?

There is no rational reason to invest in Muhurta trading. It is purely psychological. The tradition of Muhurta trading is inherently Indian. In the markets, you live and die by facts and numbers, but once a year you pray to the gods that the zero-sum game of the stock market breaks in your favor!

We do business during Muhurta for the same reason – to participate collectively in the hope of the next year. Also, you should buy more of the stocks that you believe to be holding for a longer period of time during Muhurta trading.

3. What should be the stock taking strategy during Muhurta trading?

In equities, we are choosing pharma, IT, BFSI and auto in the next quarter. We are not playing a consumption or commodity theme. Generally speaking, everything we’re buying is with a long-term outlook, so the fundamentals of the businesses we’re investing in remain solid.

4. Things to Keep in Mind When Considering Muhurta Trading

From a numbers standpoint, 11 out of the last 15 Muhurta sessions have closed in the green, so Muhurta could be a good day for traders. Perhaps there is a case for “hope arbitrage” where you can go very early in the session and close out positions at the end of the trade.

But the day of Hare Muhurta does not indicate a good year. Therefore, the lessons of wise investing continue to apply. Don’t leverage, buy fundamentally good companies and invest for the long term.

Stock Market Strategy for Diwali Muhurta Trading 2022 by Neeraj Chadawar, Head – Quantitative Equity Research, Axis Securities

1. 5 Investment Themes for Muhurta Trading

Keeping in view all the economic and market developments, we present the following themes for Samvat 2079:

• Due to their better economic outlook and accelerating credit growth in 2023, housing and banking will be the key topics to be addressed. Apart from this, affordable housing may get a further boost in the upcoming budget.

• The consumer space is witnessing a strong revival, and several categories are normalizing to pre-Covid levels with structural growth in several sub-segments. QSR Space is well positioned to deliver better returns.

• The demand momentum in the CV segment is likely to continue and we expect the CV cycle to maintain its momentum, driven by the pick-up in economic activity and the government’s focus on infrastructure.

• With demand for real estate and housing booming, the home improvement theme has gained momentum and remains strong in 2023.

• Travel and tourism is a more promising subject, which has gained more momentum after the immunization campaign has accelerated.

2. Why should investors invest in Muhurta trading and what should be their strategy?

Muhurta Vyapar is a special trading window that reflects the colors of Indian culture during the auspicious day of Diwali. This is a very old tradition which investors follow with great enthusiasm and faith. In addition, investors believe that it will bring prosperity and increase wealth and financial well-being. Investors should utilize this opportunity to invest in select ideas for a long duration Diwali Muhurat.

3. Best Long Term Investment Option for Muhurta Trading

Based on the above themes, our fundamental Diwali picks for the long term are: ITC, Ashok Leyland, Polycab, Sundaram Finance, Indian Hotels, IDFC First Bank, Westlife Development, NOCIL, and Aptus Value Housing.

4. Considering the current market scenario, which areas would be best to choose for Muhurta trading?

Investors (domestic + foreign) have actively shown confidence in India’s long-term growth story. Furthermore, this confidence has only strengthened further in the last 3-4 months, which is manifested in a shift in the market structure on household-oriented themes supported by the country’s strength as a domestic consumption economy. We have also observed that profitability is gradually shifting from commodity producers to commodity consumers in the last quarter. Consequently, domestic-oriented disciplines such as banks, domestic industry, FMCG, auto, hospital and discretionary consumption outperformed cyclical + export-oriented subjects from June lows. We believe this trend is likely to continue in the coming quarters.

5. Top Stocks to Buy

Based on the above themes, our fundamental Diwali picks for the long term are: ITC, Ashok Leyland, Polycab, Sundaram Finance, Indian Hotels, IDFC First Bank, Westlife Development, NOCIL, and Aptus Value Housing.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.