BSE Sensex and NSE Nifty 50 were highly volatile in May on the back of higher inflation print in the US market and aggressive rate hike expectation by the US Federal Reserve which resulted in weaker economic cues across the globe. Furthermore, the RBI surprised the market with a 40bps repo rate hike in an unscheduled MPC meeting, accentuating the negative sentiment. Axis Securities rolled over its Nifty target to Mar’23 to 18,400 by valuing it at 20x on FY24 earnings vs. 22x earlier. It said that mixed performance of sector and style indices in the last couple of months indicate that there is some degree of change in the market regime. It also expects the market performance to remain range-bound in the near term.
Domestic research firm Axis Securities noted that for a longer duration (1-year and 2-year), the value theme has been the most dominating theme in the market. It believes that ‘Growth at a Reasonable Price’ is an emerging theme which provides good long-term risk rewards in the current market environment. Axis Securities continues to hold a positive long-term outlook on the market, supported by a favourable structure emerging as increasing Capex spending is enabling banks to improve credit growth. “The overall expenditure boost in the Union Budget 2022-23 will help deliver a broad-based growth in FY23,” it added.
7 large-cap stocks that may rally 44%
Target: Rs 1,000 | Upside 33%
Axis Securities said that ICICI Bank has been outperforming its peers and has been ticking most boxes on growth, margins and asset quality. Higher loan growth, improving operating profits, and a strong provision buffer coupled with a strong deposit franchise will help the bank achieve ROAE/ROAA expansion over FY23-24E.
Target: Rs 4,350 | Upside: 13%
Axis Securities noted that Bajaj Auto is well-placed to capitalize on demand normalization and premiumization trends in the 2W industry which should support profitability and operational performance going forward.
Target: Rs 1,700 | Upside: 44%
Axis Securities believes that Tech Mahindra has a superior services mix and multiple long-term contracts that are well-spread across the verticals, reducing its dependency on any one vertical.
Maruti Suzuki India
Target: Rs 9,800 | Upside: 22%
Maruti Suzuki India could emerge as the biggest beneficiary of demand recovery in the post-COVID period, considering its stronghold in the Entry-Level segment and a favourable product lifecycle, Axis Securities noted.
State Bank of India
Target: Rs 665 | Upside: 42%
Amongst the PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalization, a strong liability franchise, and an improved asset quality outlook, the research firm said.
Target: Rs 900 | Upside: 29%
Axis Securities has given a buy rating to Bharti Airtel aided by superior margins, stronger subscriber growth, and higher 4G conversions.
Target: Rs 1,125 | Upside: 13%
Axis Securities said in a report that the build-out of the respiratory portfolio would drive strong operating leverage for Cipla in the US business. This coupled with a sustained high single-digit growth in the India business along with further cost optimisation measures are undertaken would aid the company in expanding its RoIC by ~200bps over FY21-FY24E to ~18%.
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