New Year Stock Picks: With a strong start to the new Hindu calendar of Samvat 2080 (Vikram Samvat 2080) following an upgrade in the September quarter earnings season, stock pickers are eyeing sectors that have consistently gained over the last 10 Samvat years.
Among the major sectoral indices, BSE Bankex, BSE Energy and BSE FMCG are the three indices which have given positive returns in 9 out of 10 years of the last Samvat. Among the consistent performers, experts are bullish on banks as well as energy, while the outlook for FMCG is mixed.
Banking largecaps are trading below their historical valuations despite very good results in Q1 and Q2 due to persistent FII selling which, in turn, has been triggered by rising bond yields in the US.
Dr VK Vijayakumar, Geojit Financial Services, said, “Bankex has good potential to outperform in Samvat 2080. Even though the market is not cheap, banking stocks are attractively valued.
Things will change as the US economy slows and the Fed responds with rate cuts by mid-2024. There will be capital inflows, India will chase attractively priced banking stocks, which will boost the sector. NPAs have improved and underwriting capabilities as well as ALM status have also improved.
The energy sector is expected to perform well in the near to medium term, unless there is a severe raw material crisis, leading to higher costs and lower recoveries, impacting the P&L of the companies concerned.
“Developing the renewable energy sector on a large and sustainable scale will require large capital investments and technological advances that will develop gradually. Therefore, the energy shortage will have to be met by companies in the conventional energy sector for the next few years.
The prospects look bright for Reliance, Tata Power, NTPC and Coal India, so the energy index is expected to perform very well.
FMCG performance is likely to be moderate in Samvat 2080. Vijayakumar said, “Rural demand has not yet grown meaningfully and hence, the sector cannot be expected to perform well. But growth in line with the long-term trend can be achieved in Samvat 2080.
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