Even the foreign investors who were net sellers for quite some time has started buying in the markets last week.
- Amit Gupta
This year Diwali has started early for India Stock market investors as they saw Nifty scaling more than 500 points in the past 2 weeks from a low of 11,126 on 7-Oct to 11,661 closings on Friday 18-Oct. With the consumption story growing strong in India, Government focuses on making India a 5 trillion dollar economy by 2024 and steps such as Make in India, the Indian corporate industry is showing promising signs of growth for the coming year. Even the foreign investors who were net sellers for quite some time has started buying in the markets last week. This is a positive sign and a huge relief to the traders just before Diwali. We expect Nifty to cross its all-time high very soon, and reach levels of 13,500 by next Diwali.
Here is a list of our top 5 picks this Diwali for our investors.
Bajaj Auto is a major exporter of products of its industry. It brands itself as “The world’s favourite Indian” clearly laying down its focus on international markets more than the Indian market. Last year alone in FY19, the company exported over 2 million vehicles including two, three and four-wheeler cycles to a staggering 79 countries.
A recent launch of Chetak Electric might give them the first-mover advantage and help Bajaj attract value in the market is migrating towards electric vehicles and clean energy.
The Company is virtually debt-free and has a good return on equity (ROE) track record of 23% in the past 3 years, at the same time maintaining a healthy dividend payout of 40%. It is important to note that the Promoter’s stake has increased in Bajaj Auto recently which is a sign that the promoters are themselves finding the stock price attractive compared to its current valuation.
Recently RIL became the first-ever Indian company to breach the ₹9 trillion market capitalization mark. Its focus on retail business and online sales will help the sales grow further from here.
Reliance Retail is not just Reliance Fresh or Reliance Digital, but it extends much beyond that. Reliance is partners with some of the biggest brands of the world in India like Marks &Spencer, Steve Madden, Mothercare, Michael Kors, Jimmy Choo, Hamleys, Burberry, Armani to name a few.
With a mix of online and retail, also premium and own brands, they might have an offering for all kinds of buyers, giving it a strong brand presence across the country.
The largest port owner of the country is also into rail operations and is the largest private train operator in India. It has a fleet of 34 container rakes plus has 14 rakes on order. The company also operates 7 Grain rakes and 2 BOXN-HN rakes under the GPWIS scheme.
With the government planning divestment of Concor, it can be a good buy for Adani Ports which will make them the largest port operator of the country as well as the largest rail freight the operator in the country.
Kotak Bank’s main focus historically has been on maintaining good asset quality and controlling its NPAs. Its Risk-Weighted Assets as a percentage of Total Assets have continuously declined and the bank currently enjoys industry-low NPAs.The company has shown good consistent profit growth of over 26% in the past 5 years.
With the financial sector witnessing major liquidity crisis currently, Kotak Bank can be one name that stands out in this sector in the coming year.
Nestle is one of the few Nifty 50 companies with a history of over 100 years in business. Its reputation was hammered in 2015 after Food safety regulators raised questions on the lead levels in its flagship product in India – Maggi. However, since then they have campaigned and focused on winning consumer confidence back. With consumption ticking up and it’s Magginow getting more sales and never before market share, Nestle India is expected to outperform its peers in the coming year.
The author is Co-Founder and CEO of TradingBells. Views expressed are the author’s personal.