Investing in the stock market is a journey filled with risks and opportunities. With market fluctuations, selecting the right stocks is crucial for minimizing risks. In this article, we analyze ten stocks in India that could be potential candidates for selling due to technical and financial concerns. This list is curated for educational purposes only and does not constitute financial advice.
1. JBM Auto Ltd.
JBM Auto Ltd. currently trades at around ₹1571. This stock saw a sharp rally from May 2020 to February 2024, climbing from ₹300 to ₹2400. However, the technical chart suggests a potential for a sharp correction. Trading at 15.9 times its book value with a Price-to-Earnings (P/E) ratio of 104 (compared to the industry average of 31), JBM Auto may be overvalued. Prominent competitors like Tata Motors and Ashok Leyland are trading at much lower valuations, indicating that JBM Auto might witness a downward correction soon.
2. Bandhan Bank
With a current price of ₹168, Bandhan Bank’s technical chart signals a bearish trend. Unlike its peers in the private banking sector, which are near all-time highs, Bandhan Bank has struggled since its pandemic lows. It has a low interest coverage ratio and a return on equity (ROE) of just 8.06%. Additionally, its contingent liabilities of ₹99,214 crores and low dividend payout (7.28%) raise concerns. Selling Bandhan Bank during ongoing market corrections and reallocating funds may be a wise decision for long-term investors.
3. Hindustan Copper Ltd.
Hindustan Copper trades at ₹271 and has shown signs of a technical breakdown, suggesting potential near-term correction. With a negative sales growth of -1.12% over the past five years and a P/E ratio of 72.6 (compared to the industry average of 38.7), Hindustan Copper appears overvalued. Its chart indicates high chances of further declines, making it a candidate for divestment.
4. Action Construction Equipment Ltd.
Action Construction trades at ₹1223. The stock has seen a continuous uptrend without any significant corrections. Trading at 12 times its book value, the technical chart indicates that the stock might experience either a price-wise or time-wise correction soon. This correction could be a natural phase following its extended rally, making it a potential sell candidate for short- to medium-term investors.
5. Adani Wilmar
Adani Wilmar, with a current price of ₹324, shows a “rounding top” pattern in its technical chart, indicating a bearish trend. The stock might decline towards its IPO price of ₹230 or even lower. Although Adani Wilmar reports profits, its low sales growth (11.3% over five years) and poor ROE (8.15%) suggest that it could face significant correction in the coming months.
6. Equinox India Development Ltd. (formerly Indiabulls Real Estate)
Equinox India Development is priced at ₹107, showing a reversal candlestick pattern on the technical chart. The stock has poor sales growth (-39.1%) over the past five years, and its ROE is -10%, making it a likely candidate for near-term correction. Investors looking to avoid steep downturns might consider reallocating from this stock.
7. Restaurant Brands Asia
Restaurant Brands Asia trades at ₹94 and exhibits signs of weakness on the chart. With a low promoter holding that recently decreased by 2.16%, the stock’s structure suggests further downside. It could even reach a new 52-week low, followed by additional declines. Given its high book value ratio (7.48 times) and low interest coverage, selling this stock during market corrections could be a strategic move.
8. Lemon Tree Hotels
At ₹114, Lemon Tree Hotels shows potential for price correction down to around ₹83. Despite reporting regular profits, it has not distributed dividends, and promoter holdings have decreased by 3.11% over the last three years. The technical analysis suggests a correction, making it a suitable candidate for those considering a sell-off.
9. Patel Engineering
Trading at ₹47.6, Patel Engineering shows a “rounding top” pattern with a breakdown, indicating high correction probability. Although it reports profits, the company does not pay dividends and has a low interest coverage ratio. The promoter holding has decreased by 3.31% in the last quarter, and contingent liabilities are high, pointing to potential near-term declines.
10. Mtar Technologies
Mtar Technologies is priced at ₹1508, showing a sell-on-rally pattern. The technical analysis suggests it could experience a correction of up to ₹300 soon. With declining promoter stakes and a dividend payout of just 5.05%, this stock might see significant dips, making it a candidate for selling in the medium term.
Conclusion
Investors should exercise caution when navigating these stocks, as market conditions can change rapidly. Before making any decisions, carefully evaluate each stock and consider consulting a financial advisor. Remember, past performance is no guarantee of future results.
