The slowdown-proof stocks

It has been a turbulent year for the Indian stock markets—the Sensex is down more than 50 per cent (on Oct. 10 ’08) from its peak of 21,206.77 on Jan. 10, ’08. Big bank failures have spooked the stock markets globally. Now a credit crunch threatens to derail the global economy and plunge it into a recession. India, though somewhat insulated, may see its growth rate taper to around 7 per cent in 2008-09.

The earnings growth of many companies may suffer in the current slowdown, and their stock prices, already down, will almost certainly fall further. Hence, investors must pick investments that will be least affected by the slowdown. This is a good time to enter the market for the long term, though in the short- to mediumterm, there could be further damage. Says Apurva Shah, Head-Research, Prabhudas Lilladher: “Speculators and traders can lose their shirt in this market. The approach should be to invest in fundamentally sound companies with a two- to three-year horizon.” We spoke to a cross-section of market analysts to identify nine stocks that are relatively insulated in this age of turbulence and those that make good long-term bets. This is what they suggested.

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