Investing Opportunities in Turbulent times – HDFC Securities

Posted On Mon, July 12, 2021, 3:00 PM
Views by Mr. Deepak Jasani, Head of Retail Research, HDFC Securities

The novel coronavirus had paralysed economies, devastated communities and confined billions people to their homes. It has changed the world like no other for at least a generation, possibly since World War II.

The abruptness and speed of the economic deterioration, the sharp increase in market volatility, and the blinding uncertainty over the impact of the pandemic motivated central bankers around the globe to unleash liquidity that was unprecedented in terms of size, speed and scope.

US authorities boosted its economy by providing Stimulus packages worth as much as US $ 8.8 Trillion dollars while Indian government also announced measures to boost the economy worth more than Rs. 34 lakh cr.

All these surplus liquidities helped in bringing interest rates low for corporates and boosted asset prices across the board.  Taking advantages of lower borrowing costs and free flowing foreign fund flows, Indian corporates reduced their debt and strengthened their balance sheet.

As infection rates and number of cases of Covid 19 are trending lower, economic activities are picking up around India and the world. Economic parameters like Exim trade, GST collections, IIP numbers are exhibiting positive trend. Prediction of normal monsoon is also likely support growth of India's rural economy. Low levels of corporate debt after deleveraging exercise could boost profits and create scope for further capex going forward.

Better economic prospects and ample surplus liquidity triggered a massive bull run in global stock markets soon after the crisis in March 2020. Indian benchmark indices have doubled from its lows. Nifty Mid cap and small cap indices have handsomely outperformed the larger peers. Nifty small cap index has tripled from its March 2020 lows.

Retail investors have been enthusiastically participating in the market and millions of new investors have started investing directly into Indian equity markets. Number of Demat account has gone up 50% to 6 cr from 4 cr in just last two years.  Retail investors are contributing around 43% of the daily turnover of the NSE which was just 33% in FY2016. Excitement is also palpable in Primary market. In FY20-21 69 companies raised 74707 Cr from markets which is nearly double of what was raised in the preceding year and investors in these IPOs made a lot of money.

A major worry of global policy makers around the globe is rising asset prices especially commodity prices. Many fear that this may lead to Inflation rearing its ugly head.  Policy makers will have to raise interest rates at some point of time to contain inflation that may deflate asset prices.

We have been recommending whole host of investment ideas to our investors that has generated wealth for them. We identified multiple stock ideas across sectors, which have significantly outperformed the markets. A list of stocks which we like for long term investment at this point time is as follows:

Investment Ideas by HDFC Securities -

Well Known

Company

Sales

PAT

PE

ROE %

CMP Rs

ACC

181,994.0

19,486.0

18.1

13.5

1982.8

Bajaj Auto

317,736.0

54,076.0

20.5

27.4

4201.5

GAIL

733,000.0

80,000.0

9.0

14.1

152.2

L&T

1563,639.0

88,374.0

22.5

11.3

1508.0

LUPIN

167,688.0

17,541.0

31.3

10.0

1157.9

SBI

1263,000.0

314,000.0

6.9

11.7

432.7

FY22 Expected numbers, Rs in million     

Emerging

Company

Sales

PAT

PE

ROE %

CMP Rs

Aurobindo Pharma

254,198.0

34,147.0

16.3

12.6

1002.6

Cummins

51,794.0

7,642.0

28.0

16.8

880.6

IGL

63,570.0

12,090.0

26.9

19.4

568.3

KNR Construction

30,990.0

3,473.0

17.6

17.4

244.8

Mahindra Life

1,474.0

32.0

797.0

0.2

596.1

SBI LIFE

685,500

28,000

19.8

16.1

1009.9

FY22 Expected  numbers, Rs in million


This press release is posted under categories Banking, India, Business, Marketing, Investment

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