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At the start of Samvat 2074, the stock market was rallying, crude oil prices were at “manageable levels” and the economy, in general, was humming. One year down the line, most of these tailwinds changed direction.
Oil prices rose to put a strain on the nation's balance sheet amid an ongoing trade war between the U.S. and China. The financial sector is facing a severe liquidity crunch, and the government is at loggerheads with key institutions.
Volatility is at its peak and stocks have corrected quite a lot. The NSE Nifty 50 Index has declined over 10 percent from its August peak.
The silver lining: stocks have become relatively cheaper than what they were at the start of the year. And investors will look for opportunities to pick on the first day of the next Samvat, or the market new year.
BloombergQuint spoke to three market veterans—Sudip Bandyopadhyay, Amit Khurana, and Vinay Khattar—on stocks that they are betting on during Samvat 2075.
This Samvat is a great opportunity for an investor who is looking to invest in the market and he should not lose this opportunity.
The group chairman of brokerage at Inditrade JRG Group picked the medium and heavy commercial vehicles major Ashok Leyland Ltd, with a target price of Rs 150 over the next year.
He is optimistic over the implementation of BS-VI norms, the central government’s new scrappage policy and demand outlook in the commercial vehicle space. He expects the company to give good returns over a 2-3 years, while highlighting production costs and currency headwinds as key risks.
Sudip also recommended Bharat Electronics Ltd., which according to him, is the only public-sector undertaking that investors should bet on.
We are not in the mode to allocate full cash in the market. There’s a case of an earnings downgrade in the third quarter due to cost pressures. I would be cautious over the next two quarters.
The director of research at Dolat Capital Market prefers a “wait and watch” on the market but finds opportunities in select stocks. Khurana’s top picks are Relaxo Footwear Ltd. and private-sector lender ICICI Bank Ltd.
“I like the light footwear space in general,” Khurana said. “One of the largest unorganised sectors is moving towards the organised space.” He anticipates a big shift in the footwear sector to branded articles.
His optimism on Relaxo stems from its better revenue growth than Bata India Ltd., the highest margins compared with its peers and a strong grip on the mass segment. “I won’t be surprised if they get very close to Bata in terms of size over the next few years.”
Khurana expects improving asset quality and faster resolutions from the National Company Law Tribunal cases as key triggers for further upside on ICICI Bank.
No matter how bad the situation looks today, the next few years are going to be extremely good.
Khattar’s first stock pick is Parag Milk Foods Ltd., which he believes will be a “good compounding story” over the next 3-4 years. He listed variety in its product mix, increasing presence across the country and “less-expensive” valuations compared with its peers in the consumption basket as factors behind his preference.
The head of Edelweiss Investment Research’s second stock pick is integrated paper producer JK Paper Ltd., due to strong earnings growth prospects and balance sheets, in addition to reasonable valuations, for which he recommends an investment horizon of up to two years.
Watch the full show here
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