Analysts on Dalal Street believe that the domestic equity market is likely to stay stock-specific in the ongoing financial year amidst the risk of global slowdown and its lagged impact on India. Therefore, they prefer companies with diversified revenue mix and strong cash flows. The last financial year stood highly volatile for the stock market due to the sustained outflows by foreign institutional investors, ongoing war between Russia and Ukraine and interest rate hikes by the Reserve Bank of India to tame inflation.
The benchmark equity index BSE Sensex inched higher by 0.7 per cent in the last 12 months till March 2023, while the broader indices BSE Midcap and BSE Smallcap declined 0.2 per cent and 4.5 per cent, respectively, during the same period. The BSE 500 index also retreated 2.30 per cent in FY2023.
Sharing his views on the stock market, Santosh Meena, Head of Research, Swastika Investmart said, “We are currently experiencing a period of scepticism and a necessary market correction. However, there are still opportunities for investors to identify stocks with attractive valuations and strong growth potential. By focusing on this investment space, investors can generate good returns in the current market environment. It is important to avoid over-diversification at this time, and instead, investors should consider allocating the majority of their portfolio to their top 3-5 investment ideas.”
On the other hand, Kotak Institutional Equities said that rural wages have seen strength in recent months as well, which could help rural demand. Normal rainfall remains a key risk and El Nino has drawn clouds on CY2023 monsoons. Recent instances suggest it does affect agriculture GVA. The brokerage expects GDP to grow at 5.6 per cent in FY2024, on an assumption of a global growth slowdown.
For stock-specific investors, Kotak Institutional Equities suggests players like Reliance Industries, Tata Steel, Mahindra and Mahindra and ICICI Bank with an upside of more than 20 per cent. It also sees a 10.5 per cent upside in Britannia Industries, an 11.1 per cent upside in Cummins India, 19.1 per cent in Infosys and 16 per cent in Sun Pharmaceuticals.
Brokerage KR Choksey Shares and Securities also holds a ‘Buy’ rating on Asian Paints with a target price of Rs 3564, indicating an upside of 28 per cent from the current market price. It also sees a 40 per cent upside in CreditAccess Grameen with a target price of Rs 1,290. KR Choksey Shares and Securities is also positive on Godrej Consumer Products, HDFC Bank, Tata Consumer Products and Rossari Biotech with an upside of 15 per cent, 21.70 per cent, 34.5 per cent and 24 per cent, respectively.
Also read: Marico: Analysts see up to 23% upside on FMCG stock post Q4 business update
Also read: This NBFC stock rose 1,600% in three years; fell after three days in last session