MUMBAI: Last year’s Diwali Muhurat trading at the bourses was one of the brightest with both the benchmark indices, BSE Sensex and NSE Nifty, closing positive. That was against the backdrop of liquidity crisis, and the uncertainty in the non-banking financial sector and bad loans in the banking sector after the collapse of Infrastructure Leasing & Financial Services Ltd. We got a word of caution from experts from the trading floor on Muhurat day to stay conservative in picking stocks.
The year since then has been pretty volatile; yet, the benchmark indices are showing gains. Sensex, from its November 7, 2018, closing of 35,237.68, is currently around 39,000 and Nifty, from 10,600 that day to around 11,600 on Friday’s close. The GDP since then has been on a downhill and corporate earnings are showing divergent trends across sectors. Auto stocks have been down; some of the consumer stocks lost steam on worries of rural consumption and overall demand issues.
“First, let’s get the basics right. It is not just the slowdown, but disruption that is hitting stock markets today,” said HDFC Securities, pointing to the Diwali bumper sales on Amazon and Flipkart, Netflix movies, foodservice and ride-sharing apps, etc. “So, the message for the investors this Diwali is to change with times. And, in our stock ideas, to choose managerial excellence over connections in powerful places; to choose integrity over compromise; customer franchise over cyclical price rise; free cash flows and responsible financial structures over reckless leverage,” it said.
The stockbroking firm picks Affle India, Amber Enterprises, Apollo Hospitals, Bajaj Auto, BEML, Deepak Nitrite, Fairchem Speciality, GRSE, Muthoot Finance, SBI Life, Sudarshan Chemical Inds and Ultratech Cement.
According to ICICI Securities, the recent reforms drive of the government is likely to be a key enabler of economic recovery, going ahead. “Most importantly, the government announcement of a reduction in corporate tax rate from approximately 34 per cent to 25.2 per cent is a massive trigger for revving up corporate growth,” it said, adding that low-interest rates will boost affected sectors. Supreme Industries, Kansai Nerolac, JK Cement, United Breweries, Dabur India, Axis Bank and Tech Mahindra are some stocks it recommends with potential upside ranging from 17 to 22 per cent.
Deven Choksey recommends “12 gems” with a recommending holding period of 1-2 years for this Diwali. Heavy on financials, the recommended stocks are HDFC Life, ICICI Prudential Life, HDFC Bank, ICICI Bank, Bajaj Finserv, Tata Elxsi, Reliance Industries, Mahanagar Gas, Ashok Leyland, Sundaram Fasteners, Minda Corp and Sterlite Tech. Returns expectations range from 15-25 per cent, and for Minda at 47.5 per cent and Sterlite at 43 per cent.
Apart from fundamental recommendations, Axis Securities has also given a technical recommendation for this Muhurat for short-to-medium-term holding. “These large-cap/mid-cap stocks have performed in line with the market over the last one year and are trading above their break-out levels or near their major support levels,” it said on the picks. Axis Securities’ picks are Bajaj Auto, Biocon Ltd, Colgate-Palmolive, Divis Lab, ICICI Bank, ICICI Pru Life, Mahanagar Gas, Minda Industries and Tech Mahindra.
Sharekhan adds some recent listings like Polycab India and Spandana Sphoorty to some of the stocks already listed above, and also Atul, HCL Tech and Larsen & Toubro.
This is a glimpse of what a few have recommended, and as with any stock market-related investment, weight your risk appetite, research, or reach out to your financial consultant before investing.