Experts advise stock-specific approach with a focus on fundamentally strong companies
Budget 2020 failed to meet market expectations. Some experts are even calling it a ‘missed opportunity’ to revive growth in Asia’s third-largest economy.
But, for investors, it is still a golden opportunity to get into stocks. The muted Budget has not altered the broader trend of the market which is still on the upside, suggest some experts.
The market will remain polarized in favor of consumption, IT, BFSI and oil and gas. Experts advise stock-specific approach with a focus on fundamentally strong companies with visibility of cash flows and good corporate governance.
The Nifty50 breached its 200-DMA and bounced back, but given the fact that market expectations were high from Budget, some volatility or consolidation cannot be ruled out in the near term.
The market is fairly valued and as the Budget print becomes clear, investor focus will again shift back towards earnings and valuations. Any dip towards 11000 will be a good buying opportunity as the 1-year target for Nifty50 is placed above 13000, say experts.
“This time we also need to keep in mind that any further escalation of the Coronavirus epidemic can be negative for Indian equities. After a few days, the focus will go back to earnings and valuations. As of now, the Nifty-50 is trading at 18x Fw PE which is fairly valued but leaves less room for any major re-rating,” sources said
Oza further added that the risk-reward ratio turns very favorable closer to 11,000 levels of Nifty-50 as our one year Nifty-50 target works to 13,400 levels. In that case, Investors can look to accumulate stocks in declines and turn aggressive buyers.
We have collated a list of stocks for the long term from various experts which are their top picks post Budget 2020:
Apollo Hospital: This Budget provides for increased healthcare and social security hence this stock will turn out to be a dark horse.
Sterlite Technologies: Budget 2020 aims to provide digital connectivity to 1000 villages thus this manufacturer of optical fiber would be a good pick to buy on.
Ajanta Pharmaceuticals: This Budget provides for increased healthcare and social security hence this stock will turn out to be a dark horse.
Relaxo Footwear: Increase in the custom duty will boost the profitability of this segment and thus it is a good buy in the near and long term.
IRCTC: Railways have got a favorable budget including PPP provisions for development and thus IRCTC will be able to achieve a beneficial top line.
Bata India: Increase in the customs duty to give a boost to the domestic sector and will boost the profitability of this segment and thus it is a good buy in the near and long term. Being a sector leader, this scrip is expected to outperform its peers.
HUL, Nestle India, Britannia Industries:
IT, MNC & Non-Banking PSU Stocks could do well especially the ones which also have the impetus of high dividend yield as Dividend Distribution Tax has been abolished from companies side.
Many high dividend-paying companies were shying paying high dividends due to DDT but now with DDT gone, demand for high paying dividend companies will go up thus increasing their stock price.
Stocks like HUL, Nestle, Britannia Industries could do well as personal income tax rate has been reduced so extra savings will get converted into increase consumption thus benefiting FMCGs. TCS, Coal India, and ONGC could also do well from hereon.
Bajaj Finance:
BFL is the largest consumer electronics, digital products & furniture lender in India, focused on affluent consumers. The Consumer finance business is the largest segment and contributes 39 percent of the total AUM (consolidated) of Rs 1,45,092 crore as of Dec 31st, 2019 followed by Mortgages, SME, Commercial and Rural at 30 percent, 13 percent, 9 percent, 9 percent respectively.
Consumer finance loans are high-churn, short-tenor and high-IRR products (24 per cent -25 per cent ) which compensates for higher acquisition costs.
BFL is a leader in this segment driven by a mix of Consumer durable finance, Digital product finance, Lifestyle product finance apart from 2W & 3W loans (the majority of which is sourced from Bajaj Auto).
