Quantitative models have flagged 12 Indian stocks, including NTPC and Bharat Electronics, for positive score momentum. These selections aim to navigate current market pressure driven by high oil prices and rising bond yields. While these models highlight companies with improving fundamentals, investors should remember that quantitative projections are not a guarantee of future returns.
A recent quantitative screening of the Indian equity market has identified 12 large- and mid-cap companies showing improved data scores. These stocks, which include names such as Tata Consumer Products, NTPC, and Bharat Electronics, have been highlighted for their performance potential based on specific mathematical models, even as broader market volatility continues to challenge investors.
How the Selection Works
The screening process utilized Refinitiv’s Stock Reports Plus (SR Plus) methodology. This approach does not rely on subjective opinions but instead ranks companies based on five standardized data points: earnings performance, price momentum, fundamental strength, risk levels, and relative valuation. The primary objective is to filter out emotional decision-making by focusing on companies that have shown a positive trend in their quantitative scores over the last month. Other companies identified in this screening include Amara Raja Energy & Mobility, CCL Products, and HDB Financial Services.
Navigating a Tough Market
The Indian market, represented by the Nifty and Sensex, has faced significant pressure recently. Factors such as rising global bond yields and crude oil prices hovering near $105 per barrel are tightening liquidity and fueling inflationary concerns. High energy costs often lead to higher input expenses for manufacturers, which can squeeze profit margins if companies are unable to pass these costs on to consumers. In this environment, the quantitative screening seeks to find entities that have shown resilience in their financials and business momentum despite the macro-economic headwinds.
Risks and Investor Perspective
While quantitative models provide a useful data-driven starting point, they are not a crystal ball. A stock being flagged for potential upside does not guarantee that it will achieve those gains. These projections are based on past data and current metrics, which can change rapidly if global conditions or company-specific earnings deteriorate. For instance, if energy prices remain high for an extended period, even strong companies may face downward pressure on their margins.
Furthermore, the definition of success in these models is technical. An improved 'momentum' score reflects recent price movement, but it does not account for sudden events or changes in company management or government policy. Investors often use such screenings to narrow down their research list rather than as a direct signal to trade. The most reliable protection against market uncertainty remains the underlying quality of a business, such as its debt levels, cash flow, and ability to execute projects. When considering stocks highlighted by these models, investors may monitor quarterly earnings reports, management commentary on future spending, and changes in raw material costs as indicators of whether the initial positive trend is sustainable.