Sensex breaks below 29000; top six stocks which investors can look at buying on dips

NEW DELHI: The S&P BSE Sensex cracked as much as 604 points to close below its psychological level of 29000, weighed down by losses in ICICI Bank, Infosys, HDFC Bank, L&T and ITC.

Tracking the momentum, the 50-share Nifty index also slipped below its crucial psychological level of 8800, weighed down by losses in banks, autos, realty and capital goods stocks.

However, analysts do not see a big slide from the current levels because benchmark indices are trading at crucial support levels and a bounce back cannot be ruled out, say experts.

“I would not be in a hurry to sell. If at all I sell, that will be at least 100 points higher, 8880-8900 in case there is a bounce back. For me, 8800 is a strong support which as of now seems to have been broken, but we may see some buying which will take it up and we may go back to 8900,” says Sandeep Wagle, Founder & CEO, Power My Wealth.


The 50-share Nifty index broke below its crucial psychological support level of 8800 to hit its intraday low of 8754.10.

"Overall structure still remains weak. So maybe at higher levels, I would want to re-enter those puts again. We have had an intraday low of around 8754, and this 8730-8750 has got multiple support levels, and can possibly provide some kind of bounce back," says Mitesh Thacker, Technical Analyst, miteshthacker.com.

"My bias still remains negative and the idea would be to keep shorting index or banking and IT stocks at higher levels. I would still be looking to buy into FMCG and pharma stocks," he adds.

We have collated a list of top stocks which investors can look at buying on dips:

G Chokkalingam, Founder, Equinomics Research & Advisory pvt Ltd

Sasken Communication Technologies Ltd:

Sasken is a small cap IT company. There is a lot of comfort in the stock. It has already corrected almost 35% from the peak. The most important thing is that it has got cash, which is 75% of the current market cap, and also the stock trades only at nine times one year forward earning.

Recently, the company has once again gone for arbitration process with its partner and in case it succeeds again, the cash can be equivalent to the market cap. If that happens it is only for a momentum that cash could be equivalent to market cap, and therefore I strongly recommend the stock. I firmly believe that it can achieve a target price of Rs 300 within a year's time.

Bal Pharma Ltd:

Bal Pharma has corrected almost 45% from the peak. This is very least leveraged company. It is a two-decade-old Bangalore-based midcap pharma company.

The company has got five manufacturing plants whereas the enterprise value is at 35% discount to the sales, while most small pharma companies are quoting anywhere from two to five times. Very interestingly, the strategic promoters have taken the stake at Rs 62 whereas the current price is at 10% discount to the price paid by the strategic investors.

It does not depend exclusively on either Europe or the US. So a lot of comforting factors are there, and once again I firmly believe that conservatively it can reach the target price of Rs 85 within 12 months.

Hemang Jani, Senior VP, Sharekhan

Bajaj Corp, Marico, Glenmark Pharma & Thomas Cook:

We would be looking at two or three themes. One of course is the FMCG where most of the people are going to hide because the quarterly numbers could be a little better. So, within that we like Bajaj Corp and Marico, where we think that the previous quarterly numbers were great given the weak overall volumes growth that we are seeing.

Also, in the pharma pack we think that something like Glenmark Pharma is looking quite impressive. We think a few more announcements on the outlicensing deal could come through in the next few days. Overall, we think that this sector is looking pretty interesting.

Thomas Cook is something that we have been liking a lot and we think that given the kind of turnaround that they have been able to see for their newly-acquired business this stock could be an interesting bet.

Thomas Cook may not be a holding company going forward, which could be a very big trigger, because if you look at the structure, the way the holding companies are being discounted there is going to be a 30-40% discount for that, and if that goes away that could be a big positive trigger.

If you look at the last two-three months’ data point in terms of traffic growth, the holiday booking things are looking pretty good. So we think one could definitely look at entering the good quality midcap space, where growth visibility is pretty good.

(Views and recommendations expressed in this section are the analysts’ own and do not represent those of EconomicTimes.com. Please consult your financial advisor before taking any position in the stocks mentioned.)