The countdown for 2025 has begun and all eyes are on what should be the investment strategy ahead of the new year. Axis Securities has picked 16 stocks for December 2024 as the brokerage believes it is the best time to build a long-term portfolio. The brokerage expects that the much-awaited correction has already happened and most of the stocks are available at reasonable valuations as compared to what was available three months back. The theme is choosing the stocks based on “Growth at a Reasonable Price” and “Quality” to generate satisfactory returns in the next one year. With a rollover target of Nifty for December 2025 at 26,100.
HDFC Bank, ICICI Bank, Dalmia Bharat, State Bank of India, HCL Tech, Lupin, Aurobindo Pharma, Healthcare Global, Varun Beverages, Gravita India, Bharti Airtel, Chalet Hotel, J Kumar Infra, Prestige Estates, Sansera Engineering, and Cholamandalam Invest and Finance are the top picks for December 2024.
All eyes are now on the earnings recovery in the half of FY25, which will be based on the expectation of an increase in government capex, post-monsoon activities, a good number of wedding days, and the expectation of rural pick-up in the second half.
The brokerage house foresees Nifty 50 EPS to grow by 7.6% in FY25, 13.7% in FY26, and 11% in FY27. Axis Securities anticipates Nifty earnings growth of 14% CAGR from FY23-27. Based on the current economic momentum, stable political regime, capex, and other infra-agenda, double-digit earnings growth to be achievable in the next 2-3 years.
With the recent run-up in the market, Axis Securities believes most of the narrative has already been priced in. The brokerage firm sees near-term consolidation in the market with the breadth of the market likely to narrow further. Hence, the focus remains on style and sector rotation. After the recent correction, it believes the market is in the oversold zone.
The month of October 2024 was challenging for the Indian equity market with broad-based correction witnessed across the market cap, styles, and sectors. The majority of the correction was led by the FII selling, lower-than-expected Q2 FY25 earnings, a rise in the US 10-year bond yields, and expectations of China’s recovery. The correction was further accentuated in Nov’24 due to continued selling by FIIs and a rising dollar index
After the verdict of the Maharashtra election, some breather was seen in the market and now 50% of the NSE 500 stocks are trading above their 52W high. With this correction, valuations are also reasonable for the market. Axis Securities believes this is the best time to act and shift gears to build a long-term portfolio.
However, the near-term direction of the market will be more macro-driven and the market could react in either direction based on the developments. Hence, the brokerage house recommends building positions in two themes ‘Growth at a Reasonable Price’ and ‘Quality’ to generate satisfactory results in the next year.
Axis Securities continues to believe that the Indian economy stands at the sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy. The brokerage house continues to believe in its long-term growth story, driven by the country’s favourable structure, thanks to the increasing capex which is enabling banks to improve credit growth. This will ensure that Indian equities will easily manage to deliver double-digit returns in the next 2-3 years, supported by double-digit earnings growth.
Against this backdrop, Axis Securities foresee Nifty earnings to post excellent growth of 14% CAGR over FY23-27. Financials will remain the biggest contributors for FY25/26 earnings. In its base case, the brokerage firm assumes the continuation of the political stability in a coalition government, faster GDP growth rate vs. other emerging markets, stable monsoon, stable oil prices, and one to two rate cuts of 25 bps each in the next one year.
Based on the recent developments, we have also made certain changes to its top picks. This includes booking profit in TVS Motors and Federal Bank while adding Gravita India and Healthcare Global to it.
(Disclaimer: All the stock recommendations are from Axis Securities’ top picks for December 2024 report. Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)