India Strategy – Diwali Dhamaka 2012

India Infoline News Service | Mumbai |

India Strategy – Diwali Dhamaka 2012

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!

 
Concerns
  • US fiscal cliff event risk
  • Parliamentary clearance hurdle for next set of reforms
  • Significantly higher fiscal deficit reported
Recommendation snapshot
Company Sector Market Cap (Rs  bn) CMP (Rs) Target (Rs)
Dr. Reddy's Pharma 300 1,769 1,980
GCPL FMCG 236 692 792
ICICI Bank Banking 1,221 1,059 1,340
IPCA Pharma 54 428 492
Karur Vysya Bank Banking 64 469 530
Mahindra Satyam IT 127 108 129
NBCC Real Estate 17 142 198
Radico Khaitan Breweries 17 127 145
Swaraj Engines Auto Ancillary 5 431 548
Source: India Infoline Research

Performance of Diwali Dhamaka 2011 stocks
  Reco (Rs) Target (Rs) Returns (%) CMP (Rs) Returns (%)
ITC 204 232 13.7 288 41.0
GCPL 404 486 20.3 694 71.8
Lupin 467 520 11.3 584 25.1
Sun Pharm 487 580 19.1 694 42.5
TCS 1,048 1,180 12.6 1,323 26.2
HCL Tech 412 500 21.4 614 49.0
ICICI 870 1,058 21.7 1,058 21.7
HDFC Bank 487 575 18.1 640 31.3
M&M 801 900 12.4 906 13.1
Hero Moto 2,052 1,910 (6.9) 1,910 (6.9)
Hindalco 122 113 (7.1) 113 (7.1)
Total*     12.4   28.0
Nifty 5,049 5,686 12.6 5,686 12.6
Manappuram NCD3 993     1,015 13.9
Muthoot N4 996     1,000 13.3
Muthoot N6 971     981 13.9
Gold Bees 2,538     3,015 18.8
*Assuming equal weights
Source: India Infoline Research
 

Advertisements

  • 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.