Lok Sabha Election Results 2019 | Stock market traders and investors are bracing for the big day ahead. India is going to choose its next prime minister as the verdict of the Lok Sabha elections 2019 gets announced. The Sensex and Nifty may see a lot of volatility as the election verdict will not only affect the day’s trade, but also set the future trend. The benchmark stock indices have delivered a modest 50-60% return during Prime Minister Narendra Modi’s current tenure. Yet the markets are excited on his likely return, as suggested by the rally following exit polls. But any deviation from the exit poll predictions can now create panic in the markets. Though, long-term investors can still use that dip to buy quality stocks.
Most experts trust largecaps to shine in 2019. They have been the favourite of institutions and investors as they have contributed the most in taking Nifty and Sensex to fresh lifetime highs.
Here’s a list of 10 fundamentally strong stocks that figure on the list of most brokerage houses and market experts:
1) State Bank of India (SBI): SBI is often regarded as the bellwether of India’s economy. The March quarter earnings showed improvement in asset quality, with the net Interest Income (NII) also improving. Moreover, public sector banks are seen as one of the biggest beneficiaries if the National Democratic Alliance (NDA) returns to power.
2) Larsen and Toubro (L&T): Experts believe that L&T will be the biggest beneficiary of a pickup in capex spending, boosting the stock prospects for coming years. The company’s margins and return on equity (ROE) are also expected to improve in the near future.
3) HDFC Bank: The HDFC Bank stock has given consistent returns to investors over the years. The bank has displayed strong earnings growth momentum, supported by solid advances growth, stable margins, steady cost structure and low credit costs. Experts believe that HDFC Bank will be able to deliver profit growth at the rate of 20-22% CAGR for at least five more years. Hence, the stock looks attractive at current levels.
4) HDFC: Housing Development Finance Corp. Ltd (HDFC) has shown stable asset quality, superior corporate governance and solid financial performance quarter after quarter. HDFC has been able to grow its loan book by 18-20% in the March quarter as well, a trend which analysts suggest should also continue in the coming quarters.
5) Reliance Industries: Reliance Industries Ltd (RIL) is steadily transforming itself. From being a petrochemicals firm, it is now expanding its retail, telecom and digital services. While the petrochemicals business is likely to continue doing well, the retail and telecom businesses can add real value in the coming quarters. Trials for JioGiga Fibre services for homes and enterprises are also on, with services being ready to launch across 1,600 cities. The stock can deliver significant upside, given there is a stable government at the Centre.
6) Tata Steel: The demand for metals should improve on the back of a cyclical recovery in the economy, which is expected to happen after the second quarter of the current fiscal year, according to analysts. In such a scenario, Tata Steel would be one of the key beneficiaries. The valuations of the stock are also attractive.
7) Mahindra and Mahindra (M&M): The valuations of M&M shares are attractive and will benefit from a recovery in consumer demand as well as focus on agriculture in the coming years. Also, as mentioned earlier, shares of cyclicals and rate-sensitive sectors, including auto, are expected to do well if Modi becomes prime minister again. Hence, investors can pick the stock for medium to long term.
8) Bajaj Finance: Bajaj Finance is the largest consumer durables and lifestyle financier in India and has been continuously gaining market share in these businesses, outperforming competitors by a huge margin. Bajaj Finance is also diversifying into personal loans and overdraft facility that can be seen as a natural extension of consumer finance. As consumer demand is expected to improve, the stock can deliver manifold returns.
9) Tata Consultancy Services (TCS): TCS is likely to outperform industry growth rate and will continue to gain market share. The management is confident of posting double-digit growth in the foreseeable future. Some macro concerns in the US may put pressure on the stock in the near future, but analysts are positive on the company for mid- to long-term investment.
10) ICICI Bank: With credit quality improving significantly, the ICICI Bank now seems to be on its way to recovery. The underlying loan growth is healthy and the bank is also diversifying its loan book to make it less risky. Analysts expect the ROE of the bank should show major improvement in FY20.
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