Five stocks rallying amid market sell-off

A rally in Chinese stocks, major changes to India’s F&O rules, and the Israel-Iran conflict have all contributed to recent market volatility. Sentiment has shifted, with a notably bearish tone in the markets. In the past five days, the BSE Sensex and NSE Nifty have both dropped over 5%.

Amid the turmoil, a few companies have stood out for their resilience during the sell-off in Indian markets.

Take a look:

#1 Jyoti

First on the list is Jyoti, a manufacturer of electrical and hydraulic engineering equipment, including a wide range of pumps and EPC pumping systems.

In the past five days, Jyoti’s share price has jumped 21%, and it’s up 38% over the past month. This surge can be attributed to the company’s involvement in high-growth sectors like water sewage, power, nuclear and solar energy, and naval and marine.

Additionally, Jyoti has been steadily reducing its debt, with lower interest payments over the years. FY24 marked one of the company’s strongest performances in terms of operating and net profit, despite muted June 2024 quarterly earnings. However, it is expected to show improved results in the upcoming quarters.

#2 Power & Instrumentation (Gujarat) Ltd

Next on the list is Power & Instrumentation, a company specializing in electrical contract work and providing engineering, procurement, and construction (EPC) solutions, primarily for state-owned companies.

In the past five days, its stock has surged 21%, and shares have skyrocketed by 298% in 2024 so far. The recent rally can be attributed to the company securing a significant work order from the Airports Authority of India, where it has been appointed as the specialized agency for the power supply system at the new integrated passenger terminal building at Maharana Pratap Airport, Udaipur.

Earlier, in August 2024, the company won a ₹284.1 million contract from Jharkhand Bijli Vitran Nigam (JBVNL) for electrification projects under the Mukhyamantri Ujjwal Jharkhand Yojana.

Power & Instrumentation has also raised funds recently and acquired a controlling stake in Peaton Electrical Company, which specializes in electrical panels, compact substations, and bus trunking systems. The company’s managing director, Padmaraj Padmanabhan, emphasized that the funds will be used for expansion and new opportunities.

With an order book exceeding ₹3.2 billion, the company is diversifying into the solar EPC and battery energy storage system (BESS) markets, in line with the growing demand for renewable and digital energy solutions. It is targeting a 50% year-on-year revenue growth, driven by market expansion and stronger project execution.

The Anup Engineering Ltd

The Anup Engineering was demerged from its parent, Arvind, in 2018. It specializes in manufacturing heat exchangers, reactors, pressure vessels, columns, towers, industrial centrifuges, and formed components.

The company’s products primarily serve industries such as refineries, petrochemicals, fertilizers, and power generation. Notably, the company is known for its niche Helical Baffle heat exchanger, branded as ‘Helixchanger,’ which it manufactures under license from Lummus Technology LLC, USA.

In the past five days, the stock has gained 20%, with a 97% rise in 2024 so far. This rally is largely driven by Anup Engineering’s recent strategic manufacturing and supply agreement with Graham Corporation, a US-based critical equipment firm. This partnership will enable the company to produce and supply equipment for Graham’s global projects.

As of the end of the first quarter of FY25, Anup Engineering held a robust order book of ₹8.1 billion. The company is also expanding into the green hydrogen space, although domestic demand for hydrogen remains limited for now.

Anup Engineering continues to invest in sectors like gas, hydrogen, and fertilizers, despite the slower uptake in India. Looking ahead, its new manufacturing facility in Kheda, Ahmedabad, is expected to boost both top-line and bottom-line growth, with anticipated revenues of ₹1.8 billion for FY25.

#4 Windlas Biotech Ltd

Windlas Biotech is a leading domestic pharmaceutical formulations contract development and manufacturing organization (CDMO). The company specializes in manufacturing both solid and liquid dosage forms and offers a full range of CDMO services, from product discovery and development to the commercial manufacturing of generic and complex generics.

In the first quarter of FY25, Windlas Biotech reported a 21% year-on-year revenue growth, reaching ₹1.8 billion. During the latest earnings call, management emphasized that the company is well-positioned to benefit from government initiatives like Ayushman Bharat and Jan Aushadhi, which aim to expand healthcare access to economically disadvantaged populations.

The management also expects margin improvements as operating leverage increases, supported by higher capacity utilization and the rollout of injectable products. The company has recently set up a new injectable manufacturing plant, with full-scale exports anticipated to begin in FY26, providing a strong foundation for medium-term growth.

#5 Emkay Global Financial Services Ltd

Last on the list is Emkay Global, a company that provides a range of capital market services. Along with its wholly owned subsidiaries, it offers equity, commodity, and currency broking, lending, depository participant services, wealth and portfolio management, distribution of financial products, and investment banking operations.

Over the past five days, Emkay Global’s stock has gained 16%, and it’s up 28% for the month. So far in 2024, the stock has risen 86%.

The recent rally in Emkay Global shares can be attributed to improved sentiment toward companies in the broking and financial services sector. Other players like IIFL Securities, Motilal Oswal, and Geojit have also experienced stock price gains. Additionally, technical factors may be contributing, with Emkay’s stock trading at its highest level in over five years.

In the first quarter of FY25, Emkay reported a 58% year-on-year growth in revenues, while net profit surged an astounding 3,375%. During the quarter, Emkay served as the merchant banker for the IPO of Awfis Space Solutions and advised on the preferential issue of Man Industries.

Looking ahead, Emkay is expected to benefit from a positive market environment, which supports its growing deal pipeline.

In Conclusion

With geopolitical tensions escalating amid the Israel-Iran conflict, equity markets worldwide are experiencing significant volatility. But that’s not all—investors have more reasons for concern, including stock overvaluation, the RBI’s upcoming meeting, and Foreign Institutional Investors (FIIs) redirecting funds from Indian to Chinese markets.

The market’s outlook remains uncertain, and many participants are turning cautious, choosing to short the market.

For retail investors, however, this could be an opportunity. Using selloffs to buy on dips has historically been a solid long-term strategy for investing in Indian equities. Past evidence shows that investments made in quality stocks during uncertain times have often yielded attractive returns over the long run.

Here’s a smart investor’s to-do list in the current market climate:

Track global market sentiment, not just in China but also in the U.S. and Europe.

Watch for surprises in corporate earnings, as quarterly results start rolling in.

Stay updated on geopolitical developments, even if it’s just weekly—those who were paying attention foresaw the escalation in the Israel-Iran conflict months in advance.

Monitor the fundamentals of stocks in your portfolio—even in a strong market, it’s important to avoid holding poor-quality stocks.

Keep cash reserves on hand to take advantage of any market corrections by buying high-quality stocks.

Following this simple checklist will help you navigate whatever the stock market throws your way for the rest of 2024.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com