The domestic brokerage picked HDFC Bank, RR Kabel, Canfin Home, Navin Fluorine and ABB India as its conviction buys. A stable government post-elections with a continuation of economic policies could take markets to new heights, the note said.
Prabhudas has removed Safari Industries (India), Titan, Greenpanel and Gujarat Gas as high conviction picks though it remains positive on Safari and Titan in the long term. The stocks offer a limited scope of further re-rating, it said.
The Mumbai-based brokerage values Nifty at 17.3X its PE which is a 15% discount over its 10-year average PE of 20.4X with September 2025 EPS of 1,316 and a 12-month target of 22,819. The 50-stock index is currently trading at 17X 1-year forward EPS, which is at a 16.7% discount to a 10-year average of 20.4X.
Nifty’s returns over the past 6 weeks have been 1.2%. The domestic brokerage had previously warned investors of El Nino’s impact on crops and inflation, low chances of an interest rate cut in India, expected increase in interest rates in USA, and impending political uncertainty ahead of Lok Sabha elections in India.
The ongoing conflict between Israel and Hamas and a recent spike in crude oil prices have increased the headwinds, Prabhudas said.
Demand for premium and luxury goods remains strong and all eyes are now set on the festive demand which is expected to pick up in the next couple of months.Q2FY24 Preview
1) Sector Outlook: Travel, auto, media, durables and capital goods will report strong growth in both sales and profitability while agri, building materials and staples will show tepid growth. Oil & gas and metals will show sharp improvement in profitability due to low base. Overall margin outlook remains positive with 310bps margin expansion though agri, chemicals and banks will report pressure on margins.
2) Q2FY24 will show the impact of volatile monsoons, flash floods in July, and delayed recovery in rural and consumer demand in a few segments.
3) Volatile weather conditions and higher food inflation during the quarter have also impacted the sentiments. Discretionary spending on travel, tourism, and jewellery has been good while QSR, apparel, and 2W have been impacted. PV continues to report strong numbers. The demand scenario remains mixed with strong demand from the upper and upper middle class while the lower class appears to be under some pressure.
4) Global commodities remain volatile across both agri and crude-linked segments though the commodities in general seem to have bottomed out and the impact of poor spatial distribution and El Nino is likely to impact the prices of several agri commodities including Palm Oil in the coming months.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)