Technical analysis suggests that capital goods stocks are poised for a potentially rewarding long-term bull market after being dormant for around 14 years.
Private sector banks have an unfettered ability to take larger market share of both loans and deposits, according to Rahul Bhuskute of Bharti AXA Life Insurance
RBI’s pause in rate hikes and expected cuts in the future and multi-decadal growth outlook for the domestic economy are all positives for the market.
Lending institutions –banks as well as non-banking financial companies are expected to deliver another year of strong earnings growth.
B2B manufacturing across auto ancillaries, CDMO (contract development and manufacturing organization) and businesses which have process led efficiencies will continue to generate accretive growth.
Suresh Soni believes the capital goods sector would continue to report good earnings based on above parameters.
Green Portfolio PMS founder Divam Sharma, however, keeps a distance from the gas space. He says gas stocks are highly dependent on government policies as well as the price of crude and is a very volatile space to be in
Wood has also increased his overweight position in Indian, Korean and Taiwanese stocks by 100 bps in his Asia-Pacific ex-Japan portfolio Wood has also increased his overweight position in Indian, Korean and Taiwanese stocks by 100 bps in his Asia-Pacific ex-Japan portfolio
Q4FY23 earnings season has broadly been in line with expectations but sector specific divergences were observed.
March quarter earnings until now have been broadly in line with expectations.
Nishit Master believes that in the near term, consumer spending will continue to be depressed due to still elevated inflation and the possibility of below-normal monsoon due to developing El Nino conditions.
"Auto sector is cyclical in nature and is expected to be a mixed bag in terms of earnings."
India’s growth trajectory stands out in the global context, and Nifty is trading around long-term average valuations, thereby giving a unique opportunity to investors.
After March quarter earnings, management commentaries have been largely optimistic about local demand especially on the rural side as well on manufactured product exports, says Asit Bhandarkar of JM Financial Asset Management
Given the optimism of no further rate hikes on the back of tempering inflation, the likelihood is that the economy will step on the pedal in the second half of the year, says Alok Jain
The spread of 125 bps between Indian and US policy rates is at a multi-decadal low, says Ahmad. He says the demand for a wide range of consumer durable goods is growing as disposable incomes and technological innovation are increasing in India.
On a broader level, domestic focussed companies would fare better than external focussed companies in view of their comparative less volatility, says Ajit Banerjee, Chief Investment Officer, Shriram Life Insurance Company.
PSU banks, capital goods, utilities and power stocks – these are the core economic related stocks that are likely to do much better going ahead
Talking about the top sectors to look out for, Suri mentioned that electrical equipment space, defence, hotel and auto stocks are the sectors that are leading things ahead and are all at life-time highs Talking about the top sectors to look out for, Suri mentioned that electrical equipment space, defence, hotel and auto stocks are the sectors that are leading things ahead and are all at life-time highs
HDFC Securities remains underweight on consumer (staples and discretionary), energy and small banks.
Given the ageing population and the rising demand for healthcare services, hospitals, clinics, and pharma companies should perform well.
Ajay Modi, vice president, research, Piper Serica, sees value in textile exporters, wood-panel companies, small banks, NBFCs and hospitality
Given the past issues and new rules from the RBI on ECL, (expected credit loss) the street is quite cautious on the PSU banks.
Small caps have become attractive on a broad basis as valuation has corrected below the long-term level, but calls should be based on stock analysis basis.
The current earnings season has certainly been better than previous expectations.
It has been observed that the ancillary player’s businesses are less cyclical as opposed to the real estate players and they have exhibited decent growth in free cash flows Anil Rego of Right Horizons PMS sees earnings growth in double digits in FY24 and banking to lead the pack, with Auto, capital goods and consumer to follow in FY24.
The fair value of Nifty is expected to grow at a decent pace over the next five years, says Union Asset Management Company Chief Executive Officer G Pradeepkumar. He also expects a rate cut by the end of the year but counts the monsoon and oil prices as key risks At home, Narnolia Securities CIO Shailendra Kumar is bullish on banking, NBFCs, auto components, electronics, organised retail, hospitals and capital goods and says they look set to deliver strong returns
If one looks at forward earnings multiples, the market is now in a fair value zone.
The auto sector, which struggled due to chip shortage, may see improving availability coupled with margin expansion, given the fall in commodity prices, says Gohil, Director–Global Investment Management, Credit Suisse Wealth Management
