AnandRathi's report on Diwali Picks 2015
With the present Government at the center in New Delhi infusing long overdue animal spirits into the financial markets at its arrival after general elections last year, we now see with a benefit of a hindsight that most of these hope factors seems to be played out for the markets during the first half of the present calendar year. The window of opportunity and desire for change might not last for eternity and it could be about time when critical reforms needs to be implemented as the broad based recovery, the kind of one tide lifting all boats seems slowing down going ahead with RBI glued to its inflation targeting role and Government holding back uneconomic spending.
A glance at the corporate earnings clearly suggests a scattered rebound with some sectors reporting better numbers while others like power, capital goods and infrastructure yet to show positive signs.
Major global economies are battling slowdown and expectations of lower growth pushing commodities prices southward, which is expected to continue in short term as they normalize with new prevailing prices before any significant shift in global growth upwards. We believe India presents itself an opportunity for the investors both domestic and overseas in medium to long term and we recommend investors to focus on investment in businesses that are likely to receive support from favorable government policies.
Some of the key initiatives taken up by the Government to further improve business environment includes ‘Make in India’ initiative for broader manufacturing with special emphasis on defence manufacturing. It is estimated that defence spending will increase to almost Rs 3 trillion by FY 19. The Government has also increased FDI limits in the sector to encourage private participation. Infrastructure like roads and power T&Dhas seen increase in government spending.
With this template we believe next year to be a yet another year of stock picking with a focus on building a infrastructure for development of skill, operationalization of industrial corridors including sea, river, rail and road transportation, creating smart cities which could further enable development of India’s Mittelstand.
We bring for our investors some select ideas like Welspun India, Dewan Housing finance, Bharat Electronics, Ashok Leyland, Voltas, Snowman Logistics, Kokuyo Camlin, Schneider Electric Infrastructure on the occasion of Diwali.
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