The stock has corrected by over 12% from the peak in just two sessions.
However, Kotak remains optimistic about Samvardhana Motherson’s fundamentals and long-term prospects even as it sees near-term headwinds from global growth challenges. The stock carried a weight of 160bps before getting ejected from Kotak’s portfolio.
The domestic brokerage instead included Colgate Palmolive and Cummins India in its recommended portfolio, with a weight of 150 bps each while reducing positions in Axis Bank by 35 bps to 7.2% and Mahindra & Mahindra by 40 bps to 200 bps. Titan, a Tata Group company also saw a cut in its weight by 60 bps to 150 bps.
There are nearly three dozen stocks in Kotak’s model portfolio from banks, automobiles & components, IT services, capital goods, consumer staples, pharmaceuticals, and real estate. Some of them are HCL Technologies, Infosys, Mahindra & Mahindra, Canara Bank, HDFC Bank, Britannia Industries, Power Grid, Apollo Hospitals, DLF and Reliance Industries.
Kotak altered its strategy from a bull market to a bear. “We see better investment opportunities and reward-risk balance in the top largecap names than in other parts of the market with varying degrees of optimism to euphoria,” the note said.
The largecap laggards of 2022-23 are expected to do better over the next 6-12 months while other large-cap and quality midcap stocks could see a period of time correction, Kotak said. “Narrative-based mid and smallcap stocks will eventually see large price or lengthy period of time correction,” the note added.It further sees the Indian economy moving into a riskier phase as macroeconomic fundamentals have shifted adversely in the past few months. Growth prospects remain modest but stable, with a few areas of concern.
“Adverse risks have increased for inflation (longer time required to reach the 4% target), fiscal situation as pressures from the election cycle and consolidation mounts and external balance with higher crude prices and higher-for-longer global rates remain at play,” the brokerage noted.
It has adopted a cautious stance amid near-to-medium-term macro risks.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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