Russia-Ukraine war pushes stock market to attractive levels; Sharekhan picks 24 stocks to buy for good returns

As the benchmark Nifty has corrected around 10% from its peak, brokerage house Sharekhan believes that the current weakness in the market provides an opportunity to buy quality stocks as current uncertainties are temporary.  

Inflation, high crude oil prices and recent geopolitical risks may result in near-term volatility in broader markets. Despite the above concerns, Nifty FY22E/FY23E/FY24E EPS remain stable with upgrades concentrated towards upstream oil & gas companies, it says.  Corporate earnings are also expected to gradually pick-up in H2FY23 supported by a recovery across most sectors, likely improvement in rural demand and higher discretionary spending given pent-up demand as the third COVID-19 wave fades.

"We believe that current uncertainties are a temporary phenomenon and India’s medium-to-long term economic growth outlook (8% plus GDP growth) remains intact given a recovery in private/public capex, infrastructure spending and accommodative RBI policy even in inflationary environment," it said.

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As per sharekhan around 56% of Nifty companies have beaten earnings estimates, while 30% missed them as Nifty companies grew by 24% y-o-y during Q3FY22.  

"Automobiles, cement, FMCG and chemicals face margin pressures due to high input costs and thus price hikes remain key to a recovery in margins, especially for consumption sectors," says Sharekhan.  

24 stocks to buy in falling market

Based on Q3FY22 earnings and India's medium-to-long term economic growth outlook, Sharekhan has indetified 24 stocks to buy ranging from small cap, midcap to large cap stocks.

Large-caps stocks to buy: Reliance Industries Limited (RIL), L&T, ICICI Bank, SBI, Titan, Divi’s Labs, UltraTech, Bajaj Auto, Infosys, HDFC Ltd and DLF.

Midcap stocks to buy:  Mahindra  Lifespaces, Tata Elxsi,  Jubilant  Foodworks,  Polycab  India, Vinati Organics, Century Ply, Amber Enterprises.

Small-cap stocks to buy: NOCIL, Globus Spirits, Mastek, KPR Mill, HCG and Balrampur Chini.

Meanwhile, key risks remain slower-than-expected earnings in FY23/24 and possible pause/downgrade in consensus earnings estimates with global uncertainties, geo-political tension and input-cost pressure on rising inflationary trends across most sectors.

(Disclaimer: The views/suggestions/advice 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.)