The festive season is around the corner and Indian markets are already in a festive mood as both Sensex and Nifty50 touched historic levels. The S&P BSE Sensex climbed above 60,000 levels, while the Nifty50 inched closer towards 18000 in September.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

India will celebrate Dussehra in October, followed by Diwali in November. The period is considered an auspicious time when sales of India Inc. go up during this period.

See Zee Business Live TV Streaming Below:

After the recent run-up seen in the Indian markets so far in 2021, where both Sensex, and Nifty50 have rallied more than 25 percent each could consolidate and hover around 59000-60000 on the Sensex, and 17500-18000 on the Nifty50, say experts.

“We expect no fundamental change to short-term and medium-term drivers of the market despite growing concerns regarding a sharp slowdown in China, growing expectations of reduced bond purchases by DM central banks and higher interest rates by EM ones,” Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said.

“Nifty would remain between the broader range of 18000-18200 on the higher side and 17300 and 17000 on the downside,” he said.

On the sectoral front, consumer-focused sectors such as automobile, real estate, consumer durable, banks, agri etc. will be in focus during this period.

“Auto, retail, and consumer durable sectors tend to outperform ahead of Diwali, but this time real estate sector may take leadership on the back of strong demand outlook,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.

“We are likely to see strong bounce back following this correction, hence we may again resume our bullish trend in November and December.  If we talk about levels then Nifty & Sensex may trade around 17500-18000 & 59000-60000 zone, respectively by the Diwali,” he said.

We have collated a list of stocks from various experts that could be in focus ahead of the festive season:

Expert: Santosh Meena, Head of Research, Swastika Investmart Ltd

Kajaria Ceramics & Canfin Homes:

I said Real estate space is looking hot ahead of the festive season where I want to go with the proxy players after a sharp rally in realty stocks. Kajaria Ceramics and Canfin homes will remain our top picks to play the bull market in the real estate space.

M&M, Minda Industries, D-Mart & Trent:

M&M and Minda Industries are our preferred picks in the Auto sector whereas D-Mart and Trent may outperform in the retail space. 

Expert: Shrikant Chouhan Head of Equity Research (Retail), Kotak Securities Ltd

PVR:

We expect PVR’s business to recover over 2HFY22 as Covid restrictions ease, and pent-up demand can potentially drive a surprise.

Disney’s decision to discontinue simultaneous theatrical and digital release of movies validates relevance of theatres and alleviates concerns around structural risk from OTT.

PVR is trading at a 14 per cent discount to pre-Covid valuations, while several consumption stocks have re-rated by over 30 per cent. There is room for some re-rating as operating metrics recover. We value the company at 12.5X Sep 2023E EV/EBITDA (11.5X).

Tata Steel:

The management commentary suggests that India's margins at a record high in 1QFY22 could sustain in coming quarters. Europe margins could increase by 1-2X from 1QFY22 levels with a price reset in contracted volumes.

Accelerate deleveraging creates room for further growth capex China’s recent changes in its steel export policy and supply restrictions should keep steel margins elevated for longer. Risk-reward remains favorable.

LIC Housing finance:

An improving real estate cycle, driving higher disbursements and likely gradual improvement in collections will augur well for LIC Housing Finance. Following the sharp underperformance, we upgrade the stock to BUY from ADD.

PI Industries:

PI’s success rides on its focus on innovation and strong execution track record. It has one of the highest R&D spends at 3.5% of sales while focusing keenly on innovator relationships--95% of its CSM revenue comes from patented molecules.

Growth momentum is likely to come from new drivers: (1) the pharma foray through the acquisition of Ind-Swift Laboratories (ISL) and (2) manufacturing opportunities in new verticals.

PI’s strengths in chemistry and manufacturing assets will drive its success in new verticals like pharma over the long-term. Retain ADD with a price target of 3500.

Blue Dart:

Our TP of Rs 7700 is based on 55x FY24E EPS comparable to multiple of 55x BDE enjoyed during its high growth phase of FY11 to FY16.

We are positive on BDE for the following reasons: (1) leader in air express business (2) unparalleled infrastructure (3) strong B2B business (4) 34% earnings CAGR over FY21-FY24E driven by volume growth and cost efficiencies (5) Efficiencies in working capital management help to maintain a strong balance sheet (6) Strong return ratios with further improvement over FY21 to FY24E and (7) Parentage of DHL.

BDE has exhibited strong volume and revenue growth with multiyear high operating margins in FY21 and Q1FY22 despite Covid led disruption.

We estimate the trend to continue over FY21 to FY24E. Declining Covid cases, fast pace of vaccination, and estimated strong GDP growth in India (our estimate is 9% in FY22 and 6.5% in FY23) would facilitate growth further for the company and can provide a positive surprise.

(Disclaimer: The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)