Hunt for a new 'Adani' in the next bull market cycle, says Amit Jeswani of Stallion Asset

Amit Jeswani, Founder and CIO of Stallion Asset

The current leg of the bull market will be led by the power sector stocks, as participants bet on a stable BJP-led government formation in 2024 after Prime Minister Narendra Modi’s party swept three out of the four state elections, said Amit Jeswani, Founder and CIO of Stallion Asset.

Benchmark market indices soared 1.5 percent on December 4, with Nifty rising 335 points to above 20,600; whereas Sensex jumped over 1,100 points to 68,587.

Jeswani advised investors to find the new 'Adani' -- the stocks or companies that are growing at 40-60 percent. "Last time when Prime Minister Narendra Modi won the 2014 elections, the stock price of Adani Group's flagship entity - Adani Enterprises was Rs 30, today the stock is hovering around Rs 2,500 apiece. The next hunt, hence, should be finding the new Adani,” he said.

“Investors can easily track good promoters, earnings, and their ability to hyperscale every quarter. These methods can help them find new opportunities."

The markets see a shift in sectoral flavour about every 18 months, said Jewani. The next bull market rally for 3-6 months could be the 'power' play, while the momentum will be driven by earnings growth expectations in the run up to 2024 general elections, he said.

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"We have seen chemicals, technology, defence and railways play out. However, the current market cycle would be led by power players - especially the ones focused in the renewable energy space," he expressed.

In the past month, NTPC, Tata Power and JSW Energy have surged in the range of 8-17 percent, data shows. The S&P BSE power index has gained over 14 percent in the period.

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Jeswani added that since power generation capacities are moving towards 2,700 gigawatt (GW) from 1,300 GW in the next seven years, this is the sector to invest.

"Given that most power players have shifted their operational focus on renewable sources, they are less worried about whether power purchase agreements (PPAs) are in place or coal is available," he said, betting on NTPC, Tata Power, and JSW Energy stocks for long-term.

For the market on the whole, Jeswani underlined three guiding factors for investors — valuations, growth and liquidity.

"As the current state election results were in-line with market expectations, the market is continuing to bet on resilient government formation in 2024 general elections with similar policies," he said.

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In a bull market, valuations would be a key factor to watch out for. "A bull market is always about valuations, wherein prices keep moving higher. One needs to be picky about the stocks they choose amid this bull rally as valuations could turn out to be a bit uncomfortable," he added.

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