10 best blue-chip stocks for 2015: Karvy

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Wealth Maximizer - Largecap (WM) is an investment product of Karvy Stock Broking Ltd formulated by our Equity
Research team. It enlists 10 stocks from the Karvy Large-cap stock list.
The objective of ‘Wealth Maximizer’ is to deliver superior returns over an extended time frame. The investment philosophy
works on simple but superior fundamental research.
The 10 large cap companies in this product in our opinion reflects superior businesses with consistent future cash flows, run
competently and have potential for exponential stock price growth.
We also track short-term price distortions that create long-term value, driven by sound economic fundamentals of the
company. This reflects, stocks that have margin of safety will converge to their intrinsic value over a period of time and will
reflect superior returns.
This is also a part of managing the overall risk, the objective is to attain higher risk adjusted returns and deliver consistent out
performance.
The stock’s performance will be assessed on an ongoing basis and the composition of the stocks in the product will be altered
based on target achievement, changes in the fundamentals of the stocks, industry position, market performance and broad
macro-economic factors.
The product is being given to the clients in the form of non-binding investment recommendations so that they can decide to
capitalize on the robust fundamentals and future plans of the company, which is being discussed in detail in the report.

Wealth Maximizer 2015: Our top ten Largecap picks in the Wealth Maximizer (for a time frame of 9-12 months) are

1. Asian Paints , 
2. Divis Lab , 
3. HDFC Bank , 
4. ITC , 
5. JSW Steel , 
6. L&T , 
7. Reliance Industries , 
8. Tata Motors , 
9.  TCS and 
10. Ultratech Cement .

Outlook for 2015
Economic growth to reach 6.5%-7.0% during 2015 driven by good governance under the leadership of Mr. Modi: During
the year 2015, Indian economic growth could be driven by reform momentum. The government has taken the initiatives to
introduce GST, land acquisition amendments, insurance sector reforms and coal blocks auction bills. Under the ‘Make in
India’ campaign, Govt is opening opportunities for domestic manufacturing in Defence, Electronics Hardware & Medical
equipment from the 25 sectors identified to be given priority. The ordinance route chosen by the government for three out
of the above four bills indicates the urgency in reviving the economic growth.
Interest rate cuts to help in credit growth: Expectations over RBI cutting the interest rates by over 50 basis points were
reflected in 10Year G-Sec yields. The reduction in interest rates coupled with the improving business climate could trigger
a pick-up in credit cycle.
Subdued inflation amid softening commodity prices: Crude oil prices after falling nearly 40% in 2014, are expected to
remain soft in 2015 due to supply glut and lack of consensus among OPEC countries to cut the production. Expectations
over lower consumption from China, European Union and lower import demand from the US could keep the global crude
oil price under check.
Up-cycle in interest rates in the US reflects confidence about the sustainability of growth: US Fed is expected to increase
the interest rates by up to 75 bps during 2015, for the first time after 2006, amid expectations over strong recovery in GDP
growth to around 3%. The sharp increase could result in outflow of capital from emerging markets to the US. However,
rising interest rates reaffirm the health of the US economic recovery.
Improved macros could bring stability in Indian currency markets: Amid expectations over lower fiscal deficit of 4% and
current account deficit of 2%, on the back of lower import bills for crude oil and gold, INR is expected to display relative
strength during 2015.
Sustainability of earnings growth: Corporate earnings in India are expected to grow over 15%-18% during 2015, which
is likely to be revised further based on improvement on execution at ground level, softening commodity prices and
sustainability of the global growth momentum.
Large equity issuance through disinvestment: Large equity issuances either to comply with SEBI guidelines on minimum
public holding or new issuances like RINL could help the Government in meeting the disinvestment target as well as keep
the IPO market buoyant.
Money flows into Indian equities to remain robust during 2015: Indian equities continue to be the 2nd best performing
asset in the world equity markets, as well as the best performing asset class in India. Indian equities are expected to attract
FII inflows in 2015, that were around Rs 97,600 cr in 2014. Amid political/economic stability, direct participation of retail
investors has increased, while retail participation through mutual funds has also risen as indicated by the increase in
individual folios by 8.4 lakh during Apr-Nov 2014, reflecting confidence among the retail investors on Indian equities.