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As the Lotus Blooms Again
Our weekly compendium
Our Market Internals weekly compendium offers insight into the macro signals, global trends, market perspectives, sector calls and actionable ideas highlighted during the week.
As the Lotus Blooms, Subdued
Within a bull market backdrop, a large part of the damages contained at the minimal levels. In the absence of a bull market engine (both India and global), the aftereffects of such a negative surprise in the General Elections could have been huge. Many stocks that have seen excesses on the upside have seen retracements near 40% at the lows. This is the retracement of the past 6-8 months uptrend. This means a large part of the excesses are taken care of in one fell swoop.
The IT Inflexion Point
The turnaround in IT unfolds from an important long-term support. This is the ideal last ground for the next long-term inflexion in IT. We are tempted to give a quick verdict that the 2.5 years underperformance of IT has bottomed. The initial move off this low could target another 8% outperformance. To conclude, we could witness the third largest inflexion point since the past 15 years. Another multi-year outperformance could be evolving.
Our Top Pick: HCL Tech
One viable strategy at the inflexion point is to buy the basket and then increase bets on some stocks as more bottom-up patterns evolve. HCL Tech has entered a new orbit of IT leadership during mid-2023. We could be right at the optimal entry point to position for the next large alpha in the stock.
We do note that writings in subsequent slides are as per previously published MiB during the week. |
