Analysts on Dalal Street are bullish on select stocks from across the sectors amid the ongoing correction in the domestic equity market. The benchmark equity index BSE Sensex has plunged 1.6 per cent since the beginning of FY23. However, market watchers believe that the next 12 months will be better for stocks than the previous 12 months.
Money managers think that the domestic equity market may deliver a double-digit return in FY24. Divam Sharma, smallcase manager and Co-founder, Green Portfolio PMS said, “We expect a 15 per cent rally on Sensex and Nifty by the end of FY24. IT, pharmaceuticals, FMCG and Oil and Gas should do better in the index.”
While sharing some names of companies which may deliver solid returns going ahead, he said that there are some names which have taken a significant beating while the valuations have become mouth-watering and fundamentals are intact. “We like Piramal Pharma, Titagarh Wagons, Valiant Organics and SP Apparels to name a few. Some of these names faced temporary headwinds in the form of inflation-rise in input costs and export demand slump. The prices aren’t reflecting the fundamentals of these companies,” Sharma said.
Broader markets underperformed large caps in FY23 till March 28. Where the BSE Midcap index plunged over 2 per cent, the BSE Smallcap index tanked more than 6 per cent during the same period.
Sharma expects the broader market to give a higher return in FY24 as the valuations there are at a significant discount, even when the fundamentals have not taken a significant hit.
Anand Shah, Head-PMS and AIF Investments, ICICI Prudential AMC said, “We believe the next 12 months will be better than the last 12 months. From here, we are moving onto a stage where China’s growth will come back to an extent, energy price in Europe has softened and the fears of a Europe recession has abated significantly. Today, even if a recession were to play out in the US, the Fed has significant room to help the economy. Separately, any slowdown in the US will benefit India by way of lower commodity prices and lower interest rates. Markets will remain volatile and uncertain in the first half of FY24 before it stabilises and thus one should use the volatility and invest in a staggered way over the next six months.”
Data showed that heavy buying by domestic institutional investors capped the downside in FY23. Where foreign institutional investors offloaded shares worth nearly Rs 40,000 crore in FY23 till March 29, domestic institutional investors’ net investment stood at over Rs 2.5 lakh crore during the same period.
Santosh Meena, Head of Research, Swastika Investmart said that if there will be no major unexpected events, then both Nifty and Sensex to gradually recover and potentially revisit all-time highs of around 19,000 and 64,000, respectively. In the second half of FY24, if markets gain significant momentum, there is a possibility of the levels crossing 21,000 and 71,000 for Nifty and Sensex, respectively.
“Our top bets from the large cap basket will be Larsen and Turbo (L&T), State Bank of India (SBI), Mahindra & Mahindra (M&M), while Federal Bank and Thermax from the midcap category have the potential to produce significant gains in FY24,” Meena said. Shares of L&T and SBI have gained 20 per cent and 3 per cent, respectively, in FY23 till March 28. On the other hand, Federal Bank and Thermax have rallied 29 per cent and 14 per cent, respectively, during the same period.
Sonam Srivastava, smallcase manager and Founder of Wright Research suggested Coal India, Schaeffler India, Policybazaar, L&T Technology Services and Poly Medicure for the next 1 year. On the other hand, Amnish Aggarwal-Head of Research, Prabhudas Lilladher is bullish on Havells India, RIL, ABB, Max Healthcare, ICICI Bank, HUL and Titan.
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