5 warhorse stocks you can use to ride through a narrow market

Tried and tested business models that have stood through many storms on Dalal Street have delivered up to 1,260 per cent returns to investors in last 15 years.

As analysts project the market to remain narrow until clarity emerges on the coronavirus pandemic, it makes sense to look at companies that have retained their positions among the top 10 Nifty constituents all these years.

The list includes energy-to-telecom major Reliance Industries (RIL), IT majors Infosys and Tata Consultancy Services (TCS), private sector lender ICICI Bank and FMCG player ITC. Analysts are bullish on these counters despite the ongoing choppiness in the market.


With about 1,260 per cent rally since 2005, TCS stands out as top performer in the pack. It is followed by Reliance Industries (up 1,250 per cent), Infosys (up 420 per cent), ITC (up 400 per cent) and ICICI Bank (up 320 per cent).

“The market is going to remain narrow until credit growth comes back in the economy,” says Samit Vartak, Founding Partner and Chief Investment Officer, SageOne Investment Advisors.

The Reliance Industries stock has created a lot of buzz in recent weeks, as the company secured four back-to-back investments in less than four in its digital business Jio Platforms.

The company has also launched India’s biggest-ever right issue of Rs 53,125 crore, which opened for subscription on Wednesday.

The company allowed existing shareholders to pay only 25 per cent for subscribing to the issue, with the balance required to be paid in two installments in May and November next year. The company will offer one share for every 15 shares held at Rs 1,257 apiece.

Sanjeev Hota, head of research at Sharekhan, advised existing investors to opt for the rights issue with a 3-4 years investment horizon. He said new investors can buy RIL in a staggered manner over next 6-8 months.

The stock is down 4 per cent on a year-to-date basis, while the benchmark equity indices are down over 20 per cent for the same period.

TCS posted lower profits for March quarter at Rs 8,049 crore, but guided towards a very difficult time ahead which, it said, may even result in a ‘contraction’ in revenues in the first two quarters of FY21, as global clients fight the Covid-19 impact.


Infosys reported a 6.3 per cent increase in consolidated net profit for March quarter, but refrained from providing any revenue guidance for FY21, citing uncertainty amid the pandemic.

“We are positive on Infosys and TCS amid a falling rupee. They also quality as defensives, which are now the flavour of the season,” said Ajit Mishra, VP Research at Religare Broking

Shares of Infosys and TCS are down nearly 10 per cent so far in 2020.

FMCG player ITC trades at deep value with a superior high quality franchise, says Manish Sonthalia, Associate Director and Head Portfolio Management Services, Motilal Oswal Asset Management.

“ITC is a free cash flow-generating machine. The growth factor is going to be there. It is hard to believe that a company with 10 per cent growth have just about less than 15 P/E multiple,” he said. Shares of the company are down 31 per cent on a year-to-date basis till May 18.

ICICI Bank reported a 6.91 per cent growth in March quarter profit at Rs 1,251 crore on a consolidated basis, after setting aside over Rs 2,000 crore towards provisions for the potential impact of the Covid-19 pandemic. Analysts said, the recent fall in ICICI Bank stock provides an opportunity to buy it for the long run. The scrip is down 45 per cent on a YTD basis.

Mishra said the ongoing selloff in financial counters may drag Nifty towards the 8,400 level. “However, I will be a buyer in ICICI Bank at Rs 270-280 level from a long-term perspective,” he said.

HDFC Securities is positive on ICICI Bank with a price target of Rs 442. “Covid-19 will impact growth and asset quality across the board. A robust balance sheet, improved underwriting practices and lower exposure to contextually vulnerable products will help ICICI Bank to emerge stronger,” the brokerage said in a May 10 report.