SPA Securities recommended Amtek Auto, BILT, Bank of Baroda, Sanghvi Forging, Simplex Infrastructure and Srei Infra as Top Diwali Picks Markets started Samvat 2071 on an euphoric note on expectations of fast economic recovery but fizzled out in the second half as reality started to sink in. Markets over the year have become inexpensive as earnings have grown in single digits but major indices have been flat.
On the domestic front, macroeconomic outlook is improving steadily on the back of continued uptick in IIP numbers (34 month high of 6.4% in Aug), shrinking twin deficits, benign inflation picture and pro-reform Government at the centre. Increasing possibility of prolonged dullness in commodity prices coupled with lower oil and gold prices, amid China slowdown provide significant advantage to commodity importers like India.
Things are improving on the investment front with Government taking the lead this time by committing massive capex on road and railways sector. Further efforts are being made for quicker projects clearances, addressing fuel issues to large extent and solving SEB’s financial woes. Large corporates too have already started deleveraging through capital infusion & asset sale.
Globally, although interest rate hike by US is expected to cause some volatility in capital & currency markets, India remains much better prepared this time owing to huge forex reserves of ~USD340bn. Moreover, there is enough liquidity available globally as ECB, Japan & now China are continuing with their liquidity infusion programs.
With respect to FII inflows, India continues to offer one of the best growth opportunities across EM & DM economies with +18% CAGR in earnings over the next two years even as other major economies are struggling for growth. Icing on the cake is the increasing participation of domestic retail investors as can be seen from consistent domestic inflows.
We advise investors to use current volatility to build long term portfolios.
In this report, we at SPA Securities have presented a bouquet of stocks, that seemingly are on the cusp of re-rating, with an investment horizon of 1 year.
We wish you a Very Happy Diwali and prosperous Samvat 2072 filled with peace, success, happiness, health and wealth!!!For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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