As we bid adieu to Samvat 2080 and gear up to welcome Samvat 2081, analysts have suggested Diwali portfolios for investors, which can generate good returns in the long term. After the spectacular returns in the last year, investors should brace for modest returns this Samvat as there might be some selling pressure and volatility in the Indian markets due to global and domestic factors such as rate cut cycle, trajectory of economic growth and inflation, along with corporate earnings. Given the current valuations, there is limited room for expansion so picking quality stock at a reasonable price will be critical to achieve good returns over the coming year, say analysts.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will conduct the annual hour-long Muhurat Trading session on November 1, 2024, from 6:00 PM to 7:00 PM.
The key monitorables in Samvat 2081 will be developments in the lead-up to the U.S. election; economic recovery in China; activity during the festival season; the U.S. bond yield movements; oil price trends; and fund flows.
“While the long-term growth story for Indian equities remains stronger-than-ever, current valuations leave limited room for expansion. This means that growth in corporate earnings will be a pivotal driver of market returns,” says Pranav Haridasan, MD and CEO, Axis Securities.
The elevated valuations in India have triggered fund outflows by foreign institutional investors (FIIs), prompting them to explore growth opportunities in the relatively cheap and attractive markets like China and Hong Kong. Currently, the profit-to-earning (PE) ratio of the Indian equity benchmark index Nifty is 20.8x, which is slightly higher than the 5-Year average of 19.4x. The PE ratio, calculated by market cap divided by the earnings of the companies, is a gauge to know if markets are expensive or cheap.
In Samvat 2080, the Indian market witnessed a sharp rally in sync with the strong economic environment in the country. The equity benchmark Nifty rose around 25% (as of October 17, 2024) since last Diwali, while the global market, particularly major U.S. indices, increased in range of around 27%-35% during this period. Meanwhile, the broader Midcap and Smallcap indices surged by 37% and 36%, respectively.
However, the recent surge in crude oil prices, global economic slowdown worry and geopolitical concerns are potential near-term uncertain risks for the overall GDP growth of the economy.
“There might be some selling pressure and volatility in the Indian markets due to global and domestic concerns,” Asit C. Mehta Investment Intermediates (ACMIIL) says in a report. The brokerage, in its Diwali report, has recommended stocks that can be accumulated for the medium to long term both from fundamental and technical perspectives.
Another brokerage Angle One has maintained a positive outlook on sectors such as capital goods, construction, consumer durables, finance, fmcg, gas distribution, it, pharma, plastics, power and refractories. The agency believes that all of these are positioned to benefit from India’s economic growth trajectory. “Near-term volatility stems from ongoing geopolitical tensions in the Middle East and Ukraine, crude oil prices, ongoing major state elections, and the evenly poised upcoming U.S. elections.”
Meanwhile, Bajaj Broking in a report says that the Indian economy is anticipated to see strong growth in the second half after a period of uncertainty in the first six to nine months of the year due to geopolitical tensions, uncertainty around the U.S. interest rate cuts, and the Indian elections.
“Key factors contributing to this growth include the continuation of domestic policy reforms, reduced uncertainties in the U.S. following the elections, and synchronised global growth in a low inflation environment. Improved global liquidity conditions, driven by central banks in the West easing their monetary policies and cutting rates, are expected to enhance capital flows and boost private sector investments,” the brokerage says in a report.
Here are top Diwali stock portfolios for Samvat 2081:
Axis Securities
The top Diwali picks of the brokerage house are Gravita India; Arvind Smart Spaces; Inox Wind; KPIT Technologies; HG Infra; AU Small Bank; Lupin; Indian Hotels; and UNO Minda.
Angle One
The domestic brokerage firm has picked up ten stocks across sectors where investors can place bets. The list includes Praj Industries, Persistent Systems, Vesuvius India, Nippon Life India Asset Management, NCC, Jyothy Labs, Dixon Technologies, Mahanagar Gas, Colgate-Palmolive, and Cummins India.
HDFC Securities
The brokerage has given a list of 10 stocks - two mega caps, and 4 each in mid cap and small cap category, which are likely to offer relatively limited downside and superior upside potential. There are Bank of India, JK Lakshmi Cement, Jyothy Labs, L&T Finance, National Aluminium Company, Navin Fluorine International:, NCC, PNB Housing Finance, RIL, and State Bank of India.
Bajaj Broking
The agency has picked Tech Mahindra, BEL, Antony Waste Handling, CESC, and Agro Tech Foods as the top five picks for this Diwali.
Sharekhan
The brokerage has compiled a list of their top 15 stock picks that could boost portfolio this festive season. This includes Allied Blenders & Distillers, Bajaj Finserv, Bharti Airtel, Caplin Point Laboratories, Dabur India, Dee Development Engineers, Hi-tech Pipes, HUDCO, L&T, Mastek, PowerGrid Corporation, Reliance Industries, SBI, Sunteck Reality, and Tata Motors.
JM Financial
For this year’s Samvat 2081, the brokerage has curated stocks that may help investors in the mid to long term. This includes Reliance Industries, Power Grid Corporation of India, Bajaj Finance, ICICI Lombard General Insurance, Jindal Steel & Power, National Aluminium Company (NALCO), Gravita India, Macrotech Developers, Olectra Greentech, and Ashoka Buildcon.
Choice Broking
The brokerage house has released a list of ten stocks to buy this Diwali with an upside potential up to 70%. TCS, HCL Technologies, Bajaj Auto, Bharat Dynamics, ACC, Somany Ceramics, Granules India, Global Health, and Ugro Capital.
Asit C Mehta
The brokerage has suggested stocks such as Ador Welding, Alicon Castalloy, CIE Automotive, Astral Limited, ITD Cementation India, and J Kumar Infraprojects for Samvat 2081.
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