|Company||Adani Ports, Yes Bank|
|Date of report||November 7, 2018|
|Target Price (Rs)||410|
|The Best 10 Stocks To Buy For 96% Gain In 2019 (Techno Funda Analysis)|
|Stock||CMP (Rs)||Target Price (Rs)||Upside (%)|
We find ourselves in the optimistic camp in terms of our expectations for Samvat 2075. After the recent turmoil in financial markets, it is easy to be pessimistic. The macro outlook for India has certainly deteriorated somewhat compared to six months back; the outlook remains strong and gives us reason for optimism.
Growth in India is accelerating, the OECD Leading Indicator points to strong growth ahead. More importantly, the investment cycle in India is turning. In Q2FY 2018-19, Gross Fixed Capital Formation grew by 10% YoY.
Capacity utilization is inching upwards which should also reflect in growth and is also borne out by highfrequency indicators like commercial vehicles sales growth, cement production and air traffic growth. Many investors have been rattled by the move in currency markets.
The last time we had turmoil in currency markets was during the “Taper Tantrum” in 2013. India has made substantial progress since the taper tantrum with the fiscal deficit declining from 4.5% to 3.5%.
Similarly, the current account deficit has declined substantially from 5.08% of GDP in October-December Quarter 2012 to 2.4% of GDP in April- June 2018. This indicates that the Indian economy is in far better position to withstand the headwinds from the currency markets.
However, because of higher price for imports, especially crude oil, inflation is likely to be higher by 60 to 75 bps. We believe that the RBI is likely to increase rates by 50 bps over the next 12 months however, this is manageable and unlikely to derail the growth story.
For Indian asset markets, the major trigger will be the upcoming general elections. We expect some nervousness in markets ahead of the elections.
The results of the state elections next month will set the tone though we wouldn’t extrapolate the results to general elections as the Indian electorate can vote differently in state elections and general elections.
Our expectation is that a reform oriented stable coalition is likely to assume power. If so, a relief rally can take markets forward.
On account of the recent correction, stocks are attractive in our view, we are happy to recommend them compared to other asset classes. In this report, we list 14 stocks that we believe can deliver good returns over a 12 month period.