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Investors who are looking to top up their existing funds or build their portfolio can consider investing in consumption, IT, auto, banking, and financial stocks which could form a major chunk of their portfolio.
Despite muted global cues and rate hike fears still very relevant from an equity markets point of view, India managed to buck the global trend and emerge as an outperformer ahead of the festive season. Diwali will be celebrated on October 24, 2022.
During the last 12 months, the global m-cap has declined 15.9 per cent (USD 19 trillion), while India’s n-cap has risen by over 3 per cent, said in a report.
The momentum has been strong ahead of the festive season as Sensex reclaimed 60,000 while the Nifty50 also climbed above 18,000 on Tuesday for the first time since April 2022.
Benchmark indices Sensex and Nifty50 have rallied 17-18 per cent from their respective 52-week low, but this upside is not over yet. Although, we could see bouts of profit-taking, it is more of a buy-on-dips market.
“We remain constructive on the Indian market given the high conviction on multi-year economic upcycle. Accordingly, any pullback should be seen as an opportunity to buy into high-quality companies with an investment horizon of 18-24 months,” Gaurav Dua – SVP, Head – Capital Market Strategy at Sharekhan by , said.
At the same time, it would be wise to take home some profits, especially in the high beta spaces and the broader market, he said.
With the economy looking strong investors could go overweight on economy-focused sectors, suggest experts. There has been a considerable uptick in the demand from the consumers this festive season both from the urban as well as rural areas, they say.
“The strategy that investors should adopt is to keep accumulating at each level and not look forward to book profits too soon. The outlook and guidance on the Indian economy and growth story is stronger than ever before,” Chintan Vora, Senior Vice President,
5nance.com, said.
“This calls for the opportunity to buy and hold for a long term to reap better profits,” he added.
We have collated sectoral allocation from experts if an investor plans to put Rs 10,00,000 ahead of Diwali:
Expert: Gaurav Dua – SVP, Head – Capital Market Strategy at Sharekhan by BNP Paribas
From an investor’s point of view, we are overweight on auto & auto ancillary, banks, real estate, engineering, and consumer discretionary space. Accordingly, these sectors should form at 60-65 per cent of your portfolio allocation. Rest could be allocated to FMCG, IT and pharma/chemical companies along with select bottom-up picks. From a one-year perspective, our preferred picks among largecap would be:
, SBI, Hindustan Aeronautical, , Titan, and DLF. Within the midcap space, we prefer Polycab, , Devyani Intl, , , and .
Expert: Pawan Bharaddia, Managing Director, Equitree Capital Advisors
Infrastructure (20%):
We are seeing strong demand across the board in this segment, from roads and metros to railways and hence in building materials too. Our expectation is that the government should continue to spend on infrastructure due to its multiplier effect on the economy, budget 2022-23 shows that the central government is projected to spend a record Rs 7.5 lakh crore in capital creation in the financial year 2022-23.
Engineering Goods (15%):
Our view is that the private capex cycle is picking up in a big way, with most companies undergoing expansions and the fact that India hasn’t seen a strong capex cycle in the last 6-7 years.
Manufacturing (20%):
We are seeing strong traction in the auto-ancillary space as supply-side issues get addressed and demand revives across segments. We are also witnessing strong demand in the textile space, as the government is looking to close FTAs with Europe, UK, and Canada by Diwali.
Chemicals & Fertilisers (14%):
A lot of reputed chemical players have seen sizeable corrections over the last few months and a lot of them are also moving up the value chain. These factors coupled with the China+1 story should lead to good growth.
Defense (13%):
The large defense budget of INR 5.25 trillion announced in the Union Budget 2022-23 and the Make In India thrust are helping a lot of defense players book all-time-high order books. We expect PSUs and private players to do well, along with companies through the supply chain.
Agriculture (18%):
The government’s keen focus on improving productivity and output should benefit this sector as a whole. Along with that the global shortage due to supply chain constraints attributable to geopolitical issues coupled with the large domestic demand should benefit this entire segment across the entire value chain.
Expert: Siddarth Bhamre, Head of Research, Broking
The banking space should get lion’s share not just because of its weightage but also because of how it’s positioned to capture a rise in credit offtake due to the continuation of consumer spending and increase in private CAPEX. With NPA levels under check and a clean balance sheet, banks are well positioned.
Our top stock picks include a time horizon of 1 year including names like
, , Godrej consumers, and .
Expert: Chintan Vora, Senior Vice President,
5nance.com
The wave of the upswing in the market is directed by consumption-led demand. To have a stable portfolio and to create a better alpha over Nifty we will use Financial, IT, and Auto as the front runners, Energy, and FMCG as strong defensive, and specialty chemicals as a value buy in the diversified portfolio.
Our top stock picks include
with a growth theme and Astral, , and with a value theme are some of the investments that can be considered for buying with a horizon of 1 year from today.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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