Cochin Shipyard, HAL, 8 other defence PSU stocks fall up to 30% in a month. Is it time for bottom fishing?
Defence stocks have corrected by up to 30% in the past one month as investors look to book profits after multibagger rallies over the past one-and-half years. As a strategy, investors should stay away from bottom fishing at this time and the decision to invest in this sector should come only when the signs of reversal become apparent, experts recommend.
In the Nifty Defence index, six stocks have seen their price erode in double digits with Cochin Shipyard remaining the top loser in the pack falling by 30% in the last one month. It is followed by Garden Reach Shipbuilders & Engineers and Mazagon Dock Shipbuilders which have declined by 26% and 21%, respectively in the same period.
Others like BEML, Data Patterns (India), Bharat Dynamics, Bharat Electronics, Hindustan Aeronautics (HAL), Paras Defence And Space Technologies and Astra Microwave Products have lost between 19% and 0.20%.
According to the NSE factsheet, the index returns on the quarter-to-date basis stood approximately at negative 5% as on August 30, 2024.
Dr Ravi Singh, Senior Vice President, Retail Research at Religare Broking advises investors against indulging in bottom fishing in these stocks at this time. «Investing should be considered only when there are clear signs of reversal, which are currently absent in most defence stocks. Only a few exceptions show some stability, so it’s better to wait for stronger indications of a recovery before making any moves,» he said.
Six out of ten counters delivered multibagger returns in FY24 viz. Cochin
