What to do with Honasa, Raymond, Dixon Technologies and 3 other stocks? Aamar Deo of Angel One decodes

Time of India

26-05-2025

Benchmark indices do appear to display some fatigue as higher levels are being sold into and profit booking is also visible amongst stocks, as the run-up in many cases, has been too fast and swift
,
Aamar Deo Singh
, Senior Vice President-Equity, Commodity & Currency at
Angel One
says. This analyst spells-out strategy in previous week's major movers viz.
Honasa Consumer
(mamaearth), Raymond,
Dixon Technologies
and three more stocks. Here's what he recommends: Excerpts:
Markets had to navigate a choppy trade last week and two major events unfolded – Moody's Friday (May 16) downgrade of US' credit rating ahead of the Monday trade and Donald Trump's threat late Friday to Apple for 25% tariff and 50% to EU. How do you see this development and what are the signals for Indian investors?
Markets, to a certain extent have factored these developments and investors also do not appear to be perturbed. This can be inferred by the sideways movement of India VIX, the fear index, which continues to trade within a reasonable range between 15-20.
However, the benchmark indices do appear to display some fatigue as higher levels are being sold into and profit booking is also visible amongst stocks, as the run-up in many cases, has been too fast and swift. Further, investors are treading cautiously in the current market scenario, given that the risk-reward ratio does not appear to be very favourable.
FIIs sold shares worth Rs 11,500 crore last week. Is this a trigger for another exodus and where is this money going China or somewhere else?
The rise in yields in both the US & Japan, with the US 10-year treasury yield rising above 4.5% and likewise, Japan's 30-year yield touching 5.14%, clearly indicate that investors are once again, concerned about global macros, and a rotation of money from riskier assets to safer assets appear to be happening.
Furthermore, to add to the existing turmoil, a downgrade of the recent US sovereign credit outlook by Moody's to AA1 from AAA, has also not helped matters. However, it would be appropriate to adopt a wait and watch policy over the next fortnight to 30 days, for a clearer picture to emerge.
What are important levels to watch out for Nifty and Bank Nifty?
Overall, the uptrend remains intact for both Nifty & Bank Nifty, however a decline in the bullish momentum can definitely be seen on the charts. We have been advocating a buy on dips strategy, with support for Nifty seen around the 24,300-24,400 zone whereas resistance is seen around the 24,900-25,100 zone. As far as Bank Nifty is concerned, support is seen around the 54,400-54,500 zone whereas resistance is seen around the 55,800-56,000 zone. Amongst the two, Nifty continues to outperform Bank Nifty this month, clearly indicating the overall interest amongst the investor community.
Do you see Moody's downgrade as a big setback for the IT stocks which made a good back over the last one month prior to the last week and what should be the strategy for this sector?
USA sovereign credit rating downgrade by Moody's is definitely a cause of concern for global as well as domestic investors, as that marks a significant shift in the way investors perceive the US debt.
Moody's downgrade appears to be on the back of rising debt and reduced revenues from tax cuts, as the primary reason for this action. Effectively, this is likely to have a negative impact on the US economy, but it would be too early to say the quantum of impact on the IT sector, as the Indian IT sector is very closely tied to the fortunes of the US economy.
Luckily, the US inflation rate continues to remain in the comfortable zone, and other key macros such as GDP growth rate, monthly jobs data, are mixed at the present. Investors in the IT sector should ideally look at booking part profit and can hold the rest from a long-term perspective.
While we hear recommendations of a stock specific strategy for midcap and smallcaps, this doesn't seem to be an easy strategy for an average investor. Can you suggest ways or themes to narrow down on this pool?
Midcaps and smallcaps have had their best days as well as the worst days, and the price movements in either direction, are nothing short of a pendulum move, in many cases. So naturally, it becomes difficult for investors to decide at what levels to enter and to hold till what time.
So, the best strategy in these two segments, will be to have a 3-5 year investment horizon, stick to the quality names in key sectors such as financials, pharma, auto, tourism, defence and infra, to name a few, and add onto on declines as well, to benefit from the power of compounding, over the longer term.
There were some big winners this week like TTML, Honasa and RPower while ABFRL, DOMS and Dixon were among the worst losers. What should investors do with them along with Raymond post the carving out of the realty business?
TTML was up 26% WoW, Honasa too was up by 26% WoW, whereas RPower was up by 15% WoW. Investors would be well-advised to book part profit in all these three counters, as the moves have been very sharp, and they can trail the balance, below the technical levels of 65, 290 & 45 respectively.
On the losing side, ABRFL lost 11% WoW, 83, DOMS too lost 11% WoW while Dixon lost 10% WoW. Investors can look at exit strategies in these stocks as they appear to have formed a short-term top. So, bounce backs could be used as an exit opportunity. As far as Raymond is concerned, investors can look at this stock from a long-term perspective.