A high RoCE indicates that a company is a superior manager of capital and has the ability to track the working capital cycle. In the event of a strong correction, stocks that score high on thequality parameter should fall less in comparison with other high-beta names. Such companies with huge capex plans with funds availability can provide higher returns," Vinod Nair, Head of Research, Geojit BNP Paribas , told ETMarkets.com. "A high RoCE is correlated with superior stock returns and can reduce the probability for future fundraising initiatives, which will help them keep their debt-to-equity ratio at lower levels. "We believe high beta sectors -- typically PSUs, corporate banks, metals, and industrials -- are likely to correct more," Morgan Stanley said in a note.

Source: Economic Times July 27, 2016 06:56 UTC