Domestic-oriented companies on fund managers' radar, says analyst

The weakness in the markets has kept several blue-chip names significantly below their all-time highs, with 26 of the Nifty50 stocks trading 30-90 per cent below their all-time peaks. Fund managers say at the current price points, risk-reward is favourable for select blue-chip names. "An improvement in demand growth will benefit domestic-oriented companies. On the other hand, one is not sure whether sector and companies, which benefit from global demand, will do well, as one is seeing global growth weaken," said Aditya Khemani, fund manager at Motilal Oswal Asset Management Company.

Some of the prominent blue-chip names trading at sharp discounts to their all-time highs include Maruti Suzuki (33 per cent lower), State Bank of India (31 per cent), Hero Motocorp (36 per cent), Eicher Motors (45 per cent), Tata Motors (80 per cent), Dr. Reddy's Laboratories (40 per cent), Cipla (41 per cent), and Indian Oil Corporation (37 per cent). Further, fund managers say the markets could continue to remain polarised as growth companies are likely to fetch a premium, especially when the economy is going through a trough. "When economic conditions improve, the rally could be more broad-based," Khemani added.