As India’s elections approach, pros list 8 stocks worth buying | Wilnesh News
A growing population, strong consumption levels and a pickup in manufacturing activity have boosted India’s economy over the last year, and market observers are actively looking for opportunities in the South Asian powerhouse. India’s stock market has also been booming, with economists saying its market capitalization could reach $60 trillion in the next two decades. The BSE Sensex index, which covers 30 well-known stocks on the Bombay Stock Exchange, has gained about 10% in the past six months, while the benchmark Nifty 50 index has gained 12%. Prior to this, the Nifty 50 index surged 20% in 2023. Neil Bahal, founder of fund management company Negen Capital, said: “India has performed very well in terms of demography, population and market changes. The policies introduced by Prime Minister Modi have completely changed the face of India. Here It comes as India’s mammoth elections (about 970 million registered voters) are about to take place from April 19 to June 1. Matthews Asia Portfolio Manager Piyush Mitta has won a second term. Peeyush Mittal agreed with the consensus that Modi will win a majority again – which will be a “little thing” for the markets. “If Mr. Modi returns to power, political stability will continue. We already have pretty good monetary policy stability, with the current Reserve Bank of India (RBI) and the Indian Rupee (INR) being one of the most stable currencies,” April On the 17th, he told CNBC Pro, “The possibility that this will not happen is always very small. In this case, you will definitely see a negative reaction from the market.” Matthew, who manages $850 million, India Fund’s Mittal suggests that “as a rule of thumb” investors want to invest 5% of their portfolios in Indian stocks, in line with the country’s growth rate and its percentage contribution to global GDP. “Overall, the Indian market is more expensive compared to history. Small caps and midcaps are even more expensive and carry the highest premiums. But large caps offer good risk-return that investors can take advantage of,” he said. Conrad Saldanha, portfolio manager of the Neuberger Berman Emerging Markets Equity Fund, agrees. He said, “Last year, the large-cap index lagged behind the broad market index because of the heavy weighting of banks, consumers and IT industries, and these stocks underperformed. On the other hand, the small-cap index performed significantly better than the broad market last year, with a large number of Domestic capital inflows have pushed up valuations.” Infrastructure investment One area Mittal likes is infrastructure, where government capital spending will increase by 10 trillion rupees ($120 billion) this year, a 33% increase, to boost businesses. He said: “The government spends nearly 3.5% to 3.7% of GDP on infrastructure; we think this number will be higher and continue to drive demand for different types of capital goods and equipment.” Equipment manufacturing industry, as a key industry, benefits . Companies he oversees, including power equipment maker Bharat Heavy Electricals and engineering group Thermax, are expected to expand power generation capacity. “Both companies provide equipment for setting up new power plants. I think they will benefit a lot as orders start coming in,” Mittal said. Elsewhere, he has set his sights on engine equipment maker Cummins India. Investor interest in the company has been high, with its shares rising nearly 110% in the past 12 months. Mittal said he expected the company to benefit from rising power demand as power shortages in the country worsen. Like Mittal, Neuberger Berman’s Saldanha is keen to focus on this space and lists Bharat Electronics as one of his top picks on the subject. The portfolio manager calls the state-owned company a “leading defense equipment” company and likes that it has a large order backlog. Prospects for Financials Beyond infrastructure, portfolio managers are also focusing on the financials sector, particularly large private banks, which are “the cheapest part of the market.” “Their valuations are at historically low levels and well below historical levels over the past decade,” Mittal said. “While rate cuts may have a negative impact on banks’ margins, we actually think private sector banks can Offering pretty good returns over the next six to nine months as their starting valuations are quite cheap,” he said, naming ICICI and HDFC as his top picks. Saldanha, meanwhile, likes IndusInd Bank, which he describes as “one of the fastest growing private sector banks in India with a strong franchise in auto/retail lending as well as microfinance.” Buy Healthcare Taste? Another growing segment in India is the hospital and healthcare sector as the rapid growth in population has fueled the need for better medical facilities in the country. For Saldanha, the main beneficiary of this theme is Apollo Hospitals. He believes that “leading hospital chains can enjoy future growth as the number of beds increases and better affordability translates into higher economics per bed.” Its shares are up nearly 40% in the past 12 months. According to FactSet data, 24 of 26 analysts covering the stock have buy or overweight ratings. The average price target given by them is INR 7,047.81, which represents an upside potential of 16.1%.
