What you could keep on your radar for equity SIPs

Elections, high crude oil prices, weak rupee and tradewar concerns make the outlook for the stock market hazy. But the likely weakness in the market may make share valuations cheaper over the next few months. Analysts say the best strategy for retail investors will be to spread out their investments over the next few months to reduce the risk of committing money at higher prices when the sentiment is wobbly. While the most popular way of doing it is systematic investment plans, or SIPs, through mutual funds, those who want to hold shares in their demat accounts could do these staggered investments through stock brokers. “While doing this there is no burden of making lump sum investments at one time. This works in both bull and bear markets, as the average cost of holdings improves if one sticks to the strategy,” said Deepak Jasani, head of research at HDFC Securities. ET spoke to four brokerages for their stock picks to build a portfolio through SIPs and the strategy investors need to follow.

HDFC SECURITIES
Deepak Jasani of HDFC Securities advises a stock SIP portfolio of better-known medium-risk stocks and lesser-known high-risk stocks. Jasani advises investors to opt for a better-known stocks SIP if they have a lower risk appetite and opt for a lesser-known stocks SIP if their risk appetite is higher. He advises keeping ratio equal in terms of value of stocks in both the stock SIP options. Jasani said one should be invested in these stocks for a period that coincides with trend cycle of stocks, which is 15-18 months, but added that one should review the portfolio every six months. Investors can choose as many stocks from the list as they wish or add the stocks out of the list that they have tracked and want to accumulate over time, he said. Ideally one should do SIPs in 4-6 stocks. At the end of the 15-18 months, they may extend the SIP period or stop the SIP and wait for an opportune time to sell the stocks if they are in good profit, he said.


GEOJIT SECURITIES
In the current market environment, it would be wise to start with a stock SIP with a mix of high-quality sectors and stock ideas available at cheaper valuations compared to the averages of the past three years, said Geojit. Given the risk-taking ability, 15-30 per cent can be spread on opportunities in auto, pharma and NBFCs, with a view that equity market will stabilise over the next two quarters. Vinod Nair, head of research at Geojit Securities, recommends a portfolio for defensive as well as aggressive investors. He advises equal ratio of investment in UPL, Titan, IndusInd Bank, HCL Technologies and Asian Paints in defensive-stock SIPs. For aggressive investors, Nair recommends allocating 20 per cent in Tata Motors, 15 per cent each in Can Fin Homes and Capital First and 25 per cent each in Inter-Globe Aviation and Ashok Leyland. One can go on to hold these SIPs for 2-3 years.

IDBI CAPITAL
The brokerage advises doing an SIP investment spread over the next 12 months given that the market is still showing a bearish inclination. The elections are coming in the next 6-8 months, while depreciating rupee, rising crude oil prices and global trade war tensions are posing other concerns, said IDBI Capital. “The SIP can be done as a basket investment with 14 to 20 stocks with a periodicity of a month or fortnight,” said IDBI Capital. The brokerage’s list of beaten-down and deep-value stocks includes Aditya Birla Capital, Ashok Leyland, BSE, Bharat Electronics, NBCC, Sun TV, YES Bank and Federal Bank.


IIFL
IIFL is focusing on stocks more from the large cap space, which are not likely to get impacted by liquidity crisis and which will continue to see strong growth going forward. “Our focus is on quality companies which have been beaten down. We are focusing on stocks more from the large-cap space, rather than telling people to bottomfish in midcaps,” said Abhimanyu Sofat, head of research at IIFL. The investing ratio in each stock should be 25 per cent. He advises an SIP portfolio of Bajaj Finance, RIL, IndusInd Bank and Bajaj Finance.