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**Please click on company name for details**
Mahurat Picks 2010
With equity indices already flirting with life-time highs, our equity strategy
will be to buy on any declines in the markets as we are cautiously
optimistic as the velocity of markets is surely surprising and one which is
fuelled by liquidity, mainly in terms of FII inflows.
At 20000+ index levels, the broader markets are trading at 18.7x and
16.2x their FY11E and FY12E earnings, respectively. Though the
valuations on a FY11E basis have breached the rich valuation zone, our
sense is that market expectations have rolled over the valuations on
FY12E earnings. As we are writing this, we are in the midst of the Q2FY11
earnings season. Till now, Corporate India has met the expectations of the
markets.
On the sectoral front, we like financials, pharmaceuticals, media,
automobiles, oil & gas, capital goods and infrastructure. On the other
hand, we would like to avoid metals, real estate and cement.
The BSE Sensex has breached the fair value of the Sensex, which we
pegged at 19760 levels. However, we still believe there may be further
room for the markets to head higher if the earnings from Q3FY11 and
Q4FY11 surprises on the upside. Hence, there will be a revision in
earnings and re-rating of the broader market multiples.
Locally, we will watch how fast inflationary concerns recede, going ahead.
This is because if they do not then definitely we will see action from the
RBI and reduction in earnings estimates for corporates. The pace of
economic reforms from the government will be a key ingredient to attract
capital flows into the country. Also, a key trigger would be the pace of
inflows that are directed towards Indian markets as we believe that given
the economic environment (low global interest rates) liquidity pursuing
Indian markets would be significant.
More importantly, flows of economic data from the developed world will
keep the markets volatile. Whether the US will enter into a second
recession will be a key trigger for all asset classes across the globe. Also,
the likely impact of the US getting into or avoiding a recession will
determine the influx or exodus of global liquidity that is highly crucial for
a market like India.
Having said that, during this Mahurat trading, we are recommending
seven stocks that mainly come from the large cap (three stocks) and
midcap (four stocks) universe.
**Please click on company name for details**
1. TCS (click here fore report)
2. Reliance (click here fore report)
3. Maruti (click here fore report)
4. Dish TV (click here fore report)
5. Glenmark Pharma (click here fore report)
6. IDBI Bank (click here fore report)
7. IDFC (click here fore report)
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