Samvat 2079: Analysts bet on banks, capital goods, infrastructure and auto stocks

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Brokerages expect sectors such as banks, capital goods, infrastructure and auto companies to do well in the coming Hindu New Year. After a rather dull Samvat 2078, analysts across broking houses expect 2079 to see headwinds initially.

The Indian economy remains in a sweet spot relative to many other economies, given the large demography, higher domestic dependency, as well as the astute handling of uncertain times by politicians and the bureaucracy. “Any prolonged delay in the resurgence of growth globally could hold back India’s growth story in the interim. This is despite the fact that India is in a very good position to withstand such times compared to a lot of other countries,” said HDFC Securities.

In Samvat 2079, volatility could continue, though at a slower pace. “We may be close to a peak in the rate hike cycle. The resumption of growth at the global level and particularly on the domestic front is required to shake off the sluggish mood and get back on the path of a sustained uptrend in the markets.” it added.

Sectors in focus

For Nilesh Shah, Group President and Managing Director, Kotak Mahindra Asset Management Company, sectors such as banks, capital goods and manufacturing are likely to outperform the market in Samvat 2079. “Tech and pharma will provide interesting opportunities on a bottom-up basis in the correction,” he said in a release.

Kotak Securities is bullish on banks as credit growth was strong in September 2022 at 16.2 per cent year on year. “Banks can be in focus led by demand revival in the retail sector such as housing, auto and unsecured loans and also due to corporate resolutions. Focus on technology, automation and shift towards greener capex bodes well for sustainable long-term demand for the capital goods sector,” it said in a report.

Axis Securities believes the government thrust on the infrastructure sector is likely to continue. “Based on that theme, we have included stocks from capital goods, metals, materials and infrastructure sectors. Selected stocks from auto, pharma and IT have also been included in the report that are likely to do well in the Samvat 2079.”

According to Reliance Research, sectors such as financials, engineering, capital goods and consumer would be in focus, going forward. “We expect mid-cap to outperform strongly over the next one year.”

Stock picks

HCL Technologies: Religare Broking said in its report, “We remain positive on the long-term growth prospects of the company as it would be driven by strong order-book across verticals (such as manufacturing, financial, healthcare and media), continuous demand for service business (digital transformation) as well as robust digital capabilities of the company. Besides, its cost management programme, better utilisation of employees as well as steadiness in attrition will aid growth for margins. We continue to maintain a ‘Buy’ rating with a target price of ₹1,333.”

Federal Bank: With several key metrics at a multi-quarter high, Federal Bank having posted its highest-ever net profit this quarter has seen its stock price rise 40 per cent in the last one year and “we expect the Bank to continue that trajectory during the next one year as well,” according to LKP Securities.

City Union Bank: “We believe City Union Bank will deliver RoA, RoE of about 1.5 per cent, and 13 per cent, respectively, in FY22-24E. With healthy CRAR at about 20.5 per cent (tier I at 19.4 per cent), the bank is expected to continue higher business growth in FY22-24E without any significant dilution,” says ICICI Direct in its report.

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