The Indian stock market has been consolidating after the September run up, which was courtesy the UPA government’s renewed vigour for policy action, coupled with additional global quantitative easing. India faced an imminent fear of country downgrade by leading rating agencies, which explains the government’s suddenly found dynamism in hiking diesel price and opening up FDI in many sectors, despite severe opposition.
While downgrade fears may have subsided for the time being, they have not been dispelled completely. This gives hope that phase‐II of reforms will be unleashed in the winter session of parliament. Addressing the fiscal deficit may be next on the agenda. Although, welfare spending may not come down in the budget before elections, DTC, GST, disinvestment, telecom auction and direct subsidy through Aadhaar are likely to be taken up. Other important areas include Land Acquisition Bill and National Investment Board to revive capex.
The interest rate cycle has also peaked. CRR has been cut during the last two review meets and a repo rate cut is highly anticipated in January 2013. The market is attractively poised to increase equity positions. The open-ended QE3 may open the doors wider for increased portfolio flows in the medium term into emerging markets with decisive governments (Also read our report: ‘A Time for Midcaps’).
With festivities round the corner, here is a useful shopping list. Our research team recommends nine investment ideas for your portfolio. 8 out of the 11 stocks given last Diwali achieved their price targets and all 11 combined delivered a return of 28% till date (assuming equal weights). We had also recommended Gold Bees, which delivered a return of 18.8% till date. Wishing you and your families a Shubh Diwali and a bright and prosperous Samvat 2069!
- US fiscal cliff event risk
- Parliamentary clearance hurdle for next set of reforms
- Significantly higher fiscal deficit reported
|Company||Sector||Market Cap (Rs bn)||CMP (Rs)||Target (Rs)|
|Karur Vysya Bank||Banking||64||469||530|
|Swaraj Engines||Auto Ancillary||5||431||548|
Performance of Diwali Dhamaka 2011 stocks
|Reco (Rs)||Target (Rs)||Returns (%)||CMP (Rs)||Returns (%)|
Source: India Infoline Research
- Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
- Now Save Rs.3150 on your Demat Account ...Click here
- Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
- Get the most detailed result analysis on the web - Real Fast!
- Actionable & Award-Winning Research on 500 Listed Indian Companies.