It is good to see some analysts sticking to their convictions in the face of an adverse market trend and without mincing words. Kotak Institutional Equities’ strategists Sanjeev Prasad, Anindya Bhowmik, and Sunita Baldawa have Short Call’s vote for that.

From their latest report:

“The market is conveniently (1) baking in optimistic profitability and volume assumptions, (2) using wrong valuation methodologies and (3) fabricating implausible narratives to justify the current market capitalization of stocks.”

The trio is hoping that there is no untoward incident to jolt the market out of its ‘riskless’ mode.

Prices of some ‘narrative’ stocks—those with fancy stories around them—have corrected, but as the KIE strategists point out, it can hardly be called a correction considering that valuations are still expensive.

Not surprisingly, the KIE team is in the minority camp. The widely held view on the street is that even if the BJP were to win fewer seats than expected, the money waiting on the sidelines would gush in and limit the downside in stock prices. For all the spike in VIX, anecdotal evidence seems to indicate complacency.

HUDCO (Rs 233, 8%)

The stock hit a record high on Tuesday and rose over 80 percent in 2024.

Bull argument: Outlook on affordable housing positive. HUDCO has lent mainly to state projects, so is better placed to recover its money. The company is looking to resolve around Rs 600 crore of legacy bad debts, says Elara.

Bear argument: State projects are prone to delays. The stock price has run up too fast and is likely to consolidate.

Jindal Steel & Power (Rs 979.95,4.3 %)

The company reported a strong set of fourth-quarter numbers

Bull argument: Net profit rose almost 100 percent. Debt is up slightly as capex is close to peak, but ICICI Securities feels net debt/EBITDA is still very comfortable at 1.1x.

Bear argument: Prabhudas Lilladher notes that near-term volume growth depends upon the timely commissioning of BF-II (Blast Furnace). It expects a delay of a few months.

Zomato (Rs 187.30, -3.6%)

Reported in-line Q4 earnings

Bull argument: Ordering food over mobile apps has become a way of life with millennials. Food delivery is largely a two-player market. Nuvama says Zomato could turn profitable sooner than expected as contribution margins are improving,

Bear argument: Regulatory risks, a more competitive Swiggy, drop in average order value (AOV), competition from restaurants, and higher-than-anticipated cash burn for Blinkit.

UPL (Rs 510, -4.2%)

Reported weak Q4 earnings.

Bear argument: The Company has failed to meet targets on cutting debt. In fact, debt has risen. Added pressure on the balance sheet because of the prolonged weakness in the agrochemicals space.

Bull argument: There are signs that pricing pressure could be bottoming out. Stock is still down 40 percent from record high seen in 2021. The worst may already be factored in the price.