Looking for short-term buys despite market correction? Here are 3 stock picks

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So far in 2022, the Sensex has plummeted 10.83 per cent and the Nifty has fallen 10.57 per cent, and both indexes are within 2% of their all-time lows. Amid geopolitical tensions such as the benchmark 10-year bond yield hitting 7.60 per cent, policy tightening measures by the United States Federal Reserve, the Indian rupee touching a lifetime low of 78.28 against the dollar, rising inflation, interest rates rising in the economy, and others are driving the market to remain under sizable correction and despite huge volatility, here are three stock picks that short term investors can buy to profit from the bearish market condition.

Relaxo Footwears Ltd

Relaxo is India’s largest footwear manufacturer, and its product mix includes Hawai and Bahamas, which contribute 25% of total sales revenue (60 per cent shoes and 40% sandals), while Flite and Sparks stand for 37% of total sales apiece. Axis Securities has assigned a buy call rating to Relaxo’s shares, with a target price of 1100, and has chosen Relaxo as its top choice of the week.

According to Axis Securities, the company’s Q4FY22 performance stood tepid, especially for the open footwear category (~75-80% of Relaxo’s sales). On a positive note, its closed footwear reported robust recovery on account of the opening of schools, colleges, and work offices. We believe a significant pent up demand will be released as the rural economy revives, thereby benefiting the company’s operating performance moving forward.

Normal monsoon forecast, the recent announcement of a hike in MSP, and higher remittances will be key catalysts aiding in the revival of the rural economy, which in turn, will kick-start the overall consumption cycle of the sec, according to the brokerage.

“Hyper-inflation in key raw material prices, coupled with subdued volume growth, has been posing pressure on profits. However, we believe the company’s margins are likely to inch up going forward as the pick-up in the volumes and market share gains from the unorganized/smaller players trigger operating leverage. Relaxo has maintained healthy operating cash flow and asset turns. Moreover, its robust EBITDA Margins over the years have made it one of the most capital-efficient businesses in the industry. We believe a strong balance sheet with zero net debt and efficient working capital should help Relaxo prosper in the long run,” Axis Securities has said in a note.

ELGI Equipments

For the shares of ELGI Equipments, the brokerage firm Ventura Securities has said the stock price started its up move from 103(Oct 20) to 423 (Feb 2022), making series of higher bottoms & higher tops. Since Nov 21, the stock has attracted positive buying supported by adequate volumes.

The brokerage says the firm uptrend since Oct 20 suggests a strong Bull Grip in the stock and recently the stock gave Range breakouts & made a high of 420 accompanied by supportive volumes.

The ADX, PVT & MACD Indicator suggest a possibility of a strong up move and the possible targets are 600, said Ventura Securities in its note.

If the stock price corrects downwards the buy levels are (395-380)-368-(355-347) and the stop loss to be observed in the trade is 310, said the brokerage.

NOCIL Limited

The stock price started its up move from 44.70 (March 20) to 321 (Oct 2021), making series of higher bottoms & higher tops and during the move the stock continuously traded above the averages, said Ventura Securities. Thereafter the stock made lower tops and lower bottoms correcting to 191 (Feb 2022) and the steady uptrend from 44.70 (March 20) to 321 (Oct 21) suggest continuous buying interest, said the brokerage.

Recently the stock gave Range breakouts above previous highs of 253 & 262 making a high of 274 accompanied by supportive volumes and the Aroon Up/Down, PVT, KST& MACD Indicator suggest a possibility of strong up move in coming days, said Ventura Securities.

The possible targets are 325-400-450 and if the stock price corrects downwards the buy levels are (255-242)-232- (223-217), said the brokerage by keeping a stop loss at 205 level.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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