Aamar Deo of Angel One Advises on Paytm, HUL, Adani Green, and More: Decoding Investor FOMO in PSU Stocks

PSU Stocks Keep Rising, but Investors Should Be Careful

Many public sector stocks (PSUs) in sectors like defence, power, finance, and infrastructure have become big winners, making investors a lot of money. Aamar Deo Singh from Angel One says that investors are feeling the fear of missing out (FOMO) and are piling into these stocks. However, he advises being cautious and suggests buying lightly.

Markets Recover Post-Election with Optimism

Indian markets have bounced back strongly after the elections and have been rising for the second week in a row. This is different from the big wins in 2014 and 2019. Despite a less decisive mandate, markets are happy with the pace of reforms and policies expected to continue. Foreign and domestic buying has also helped lift the markets. But since many stocks are now at record highs, investors should approach with caution.

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Expectations from the Upcoming Budget

The upcoming Budget in July 2024 is generating mixed feelings. This will be the first Budget from the new NDA coalition government. Expectations include a focus on healthcare, affordable housing, support for the MSME sector, and possible tax reliefs for investors and the salaried class. However, nothing is certain until the Budget is announced.

Nifty’s Target and Focus Sectors Before the Budget

The Nifty index has risen about 10% from its recent low after the elections, currently trading around 23,400. Immediate resistance is at 23,500-23,600, and it could go up to 23,800-24,000 if it holds above these levels. Support is strong between 22,700-23,000. Volatility is expected ahead of the Budget, with focus sectors being defence, power, finance, PSUs, real estate, healthcare, and pharma. Investors should have a long-term view and consider systematic investment plans (SIPs).

Caution Advised Despite PSU Stock Rally

Even though PSU stocks like Mazagon, EIL, and NBCC have rallied, investors should not get too aggressive now as valuations are no longer cheap. Aamar Deo Singh advises keeping an eye on quality stocks but buying on dips and with a long-term perspective.

Top Sector Picks for Budget 2024

For those interested in infrastructure, real estate, and energy, investing through sectoral mutual funds is a good idea due to diversification and professional management. For individual stocks, consider Power Grid, IEX, and DLF, but only buy on corrections and with a long-term horizon.

Stock Recommendations: Hold or Sell?

• Praj, Titagarh, and Paytm: Praj has gained 19%, Titagarh 22%, and Paytm 11% this week. Hold Praj with a stop loss below 650. Book profits in Titagarh as it has reached a peak. For Paytm, look for a breakout above 440; if it doesn’t break this level, consider booking part profits.
• Adani Green, Marico, and HUL: Adani Green is in a 1700-1900 range and may trade sideways unless it breaks above 1900. Hold Marico with a stop loss below 580 but be ready to exit as it seems to have peaked. Hold HUL, which is positive overall and trading between 2350-2650. For a strong rally, it needs to stay above 2550.