Terms like risk-on and risk-off have again come into play after two years as investors try to figure out which are the best stocks to buy in this extremely volatile market. The Russian Ukraine war is a definitive headwind for equities and as such stocks are considered to be risk-on assets at the moment. While investors investing in gold, bonds and fixed deposits are considered as risk-off assets due to the safety of the underlying asset. As has happened in the past, when things go back to normalcy in the next few weeks or months, there is going to be a risk-on stock market rally. Wherein investors scramble to buy their favourite stocks and mutual funds for superior returns considering their investment horizon. Fund managers and analysts expect 2022 to be a lower future performance return year on the back of uncertain geopolitical situation, higher inflation and commodity prices and impending Fed interest rate hike. This environment actually presents an opportunity for investors to look at wide investment schemes to enhance returns and diversify risks. Investors should check the same from their financial advisors regarding the suggested schemes and their suitability aspect. Certain listed fundamental stocks on the stock exchanges do not have a large material impact due to the Russian Ukraine war and can be bought by investors. Analysts feel that Indian Railways PSU stock, IRCTC is one such share which merits a buy. Indian Railway Catering and Tourism Corporation Ltd. (IRCTC) is a Central Public Sector Enterprise (CPSE) under the Ministry of Railways, Government of India. It is the only authorized entity by the Indian Railways to provide catering services to railways, provide online railway tickets and packaged drinking water at railway stations and trains in the country. The company gets its maximum operating revenue from Internet Ticketing and Catering.
While the impact of Covid lockdown and consequent cancelling of all trains has severely impacted its revenue stream, but now once the rail services have resumed, it should do very well. Moreover the re-instatement of convenience charge on e-tickets will provide a significant boost to its revenues in the near quarters. Railways are considered to be the lifeline in our country due to its connectivity and affordability and therefore IRCTC would be able to weather this and bounce back strongly in the coming years. The IRCTC stock price dropped by nearly 8% during the last few weeks on the back of panic selling during the start of the Russian invasion. The selling was because of weakness in the global equity markets and nothing materially had changed in the financials of the company. Analysts tracking the sector and the IRCTC stock feel that if the geopolitical situation persists for a longer period of time, then the company may emerge as a beneficiary out of this crisis. Higher crude oil prices in India may induce private transport commuters and carriers to look at railways as a cheap, safe and preferred alternative. Moreover, with situation improving in the country pertaining to Covid and lockdowns, people will start travelling again for work and holidays . Railways should be the largest beneficiary from this due to better connectivity across the length and breadth of the country. The IRCTC stock currently quoting at Rs 760 is an excellent strong fundamental buy and investors can accumulate the share for a 30% price appreciation target in the next one year time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.