However, the market took all the headwinds in its stride and the action was very specific to stocks as Mid / small caps continued to outperform large caps, a report from domestic brokerage house Prabhudas Lilladher stated. Sector rotation is clearly visible as Realty, Metals, Power and Healthcare have joined the party, the brokerage noted.
“Festival season saw high single digit growth in 2W/PV sales, 40-50 percent growth for online platforms, robust Jewelery sales (despite high prices) and economic boost coming from cricket world cup (Oh my, Bharat could win the competition). title).However, demand trends in December are critical as FY23 saw a sharp deterioration in demand post-Diwali. Capex recovery is on track with strong performance from Capital Goods / Infra segments and a strong outlook while bank balance sheets remain healthy. The odds are even balanced as headwinds emanating from firm US interest rates, El Nino impact on crops and inflation, volatile crude and geopolitical uncertainty still abound. NIFTY is not in a bubble zone as it trades at a 17.2 percent discount to the 10-year. an average that provides comfort,” PL pointed out.
Moreover, India is on the verge of a “Mother of all Elections” after having a stable government for the past decade, however state election results will dictate market momentum in the run up to the Lok Sabha elections next year, it added.
Amidst this backdrop, the brokerage remains positive on Auto (PV), Banks, Capital goods, Hospitals, Discretionary and consumption. Also, in Q2, PL coverage universe aggregate sales, EBIDTA and PBT grew by 0.7 percent, 36.6 percent and 73.9 percent YoY respectively as margins expanded 540 bps YoY and 340 bps QoQ.
Major Target Price Increase after Q2– Maruti, Ceat, Aarti, AXIS/ ICICI Bank, Supreme Inds, Voltamp, RR Kabel, Fortis/Max/NH Hospitals, JSL, IPCA, Lupin.
Major Target Price Cuts after Q2 – UPL, Sumitomo, Greenpanel, Guj Fluro, IGL, Bajaj Electricals, Westlife Food World, Reliance Ind.
goals
Base Case: In this scenario, PL values NIFTY at a 15% discount (17.3x) to 10-year average PE (20.4x) with 25 September EPS of 1302 and arrives at the 12-month target of 22,584 (22,819 based from 17.3x on September 25). EPS of ₹1,316 earlier).
Ox Case: In this, the brokerage rates NIFTY at a 7.5% discount to the 10-year average and arrives at the bull case target of 24,573 (24,833 earlier).
A Bear Case: In the Bear case Nifty may trade at a 25% discount to LPA (25 percent earlier) with a target of 19,927 (20,135 earlier).
Model Portfolio: The brokerage remains overweight on Auto, Banks, IT services, capital Goods and Healthcare and Underweight on Metals, Cement, Consumer, Oil and gas and Diversified Financials.
In its model portfolio, the brokerage increases weightage on Maruti, Cipla, Max Healthcare, Siemens, Titan Company, Avenue Supermarts while cutting weights on HDFC Bank, ICICI Bank, Ashok Leyland and Britannia.
High Conviction Picks: The brokerage has also added Max Healthcare, Hindalco, Eris Life and Suntek Realty to conviction picks. Meanwhile, it also added Kajaria Ceramics and Restaurant Brands Asia as counter picks. Deepak Nitrite and Divi’s Laboratories are its Over-the-counter options.
On the other hand, PL removed SBI, Carborandum, Chalet and Crompton Consumer from its portfolio.
Model portfolio
Large caps: ABB India, Avenue Supermarts, HDFC Bank, Hindalco Industries, ICICI Bank, Maruti Suzuki, Max Healthcare, Reliance Industries, and Siemens
Mid/Small Caps: Can Fin Homes, Eris Lifesciences, Navin Fluorine International, Navneet Education, RR Kabel, and Sunteck Realty.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Updated: 22 Nov 2023, 15:44 IST
(tagsTo Translate)Markets