Best equities to purchase at the 80,000 Sensex level: Analysts think the current rise has more legs even after the BSE Sensex index crossed the 80,000 threshold for the first time in intraday trade on July 3. They stated that the industries that would lead the upturn were financials and consumer, both of which had underperformed in recent months.
Even if the Sensex crossed the 80,000 threshold, the index still has a lot of opportunities. Right now, two incredibly deep-value stocks are HDFC Bank and Ultratech Cement. Sector-wise, fast-moving consumer goods (FMCG), pharmaceuticals, and banking and financial services are appealing at the moment, according to Kranthi Bathini, director of equity at WealthMills Securities.
The benchmark BSE Sensex index broke above the 80,000 barrier for the first time ever on July 3, 2024, when it reached a record high of 80,074 in intraday trading. The extraordinary accomplishment was primarily made possible by a robust increase in HDFC Bank stock prices.
December 11, 2023, saw the BSE Sensex cross the 70,000 threshold for the first time. Since then, it has increased 13.7% (as of Tuesday’s end).
Equities Leading This Rally Have Been Mahindra And Mahindra Etc.
According to ACE Equity data, the particular equities leading this rally have been Mahindra and Mahindra (M&M), Power Grid Corporation, Adani Ports and SEZ, Bharti Airtel, Tata Motor, Tata Steel, and NTPC. There has been a 30% to 72% increase in these equities.
Conversely, the largest laggards with returns ranging from (-)9.5% to (+)4.7%) were Asian Paints, Bajaj Finserv, Titan Company, ITC, IndusInd Bank, Kotak Mahindra Bank, Bajaj Finance, Hindustan Unilever (HUL), Nestle India, and HDFC Bank.
“The place to be is at banks and FMCG. Since banks have been the main driver of the recent upswing, I anticipate that companies in this pack will maintain the pace going forward. According to independent market expert Amabreesh Baliga, “You can purchase HUL, ITC, Dabur, and Jyothy Labs from the consumer space and Axis and ICICI Bank from the banking sector at current levels.” Even if HDFC Bank is appealing, he continued, one could consider it on dips given the recent upswing.
The BSE FMCG index has increased by 6% so far in 2024, while the BSE BANKEX has increased by 9%. The benchmark index, in contrast, has increased by 10% so far this year.
The Place To Be Is Large-Caps
Regarding valuation, the Sensex index is now trading at a trailing price-to-earnings (P/E) multiple of 24.2x. In contrast, the 5-year P/E average of the index is 26x, while the 10-year is 24x.
In light of the Indian economy’s 7% growth rate and the index’s stark underperformance in comparison to mid-and small-cap stocks during the last several years, economists surmise that the BSE Sensex index is still in a stable place with potential for further rise.
According to G Chokkalingam, founder and head of research at Equinomics Research, “Investors should allocate at least 50 percent of their equity assets in the large-cap stocks as the index remains in a comfortable zone with another 7-10 percent rally, over the next one year, highly likely.”
He has a preference for large-cap equities, such as HDFC Bank, Infosys, Reliance Industries, Jio Financial Services, and ITC.
A Word Of Caution
Nevertheless, experts issued a warning, pointing out that the recovery in the banking and consumer sectors will depend on how the monsoon played out, as this would affect the recovery of demand and the ensuing expansion of credit.
“The mood can suffer if the poor monsoon, which is now in deficit, causes the interest rate drop cycle to be postponed. In the worst case, the benchmarks might decline by three to five percent,” Equinomics Research’s Chokkalingam continued.
In contrast, he added that certain individual stocks may drop as much as 30%, which may cause the larger mid- and small-cap indices to have a sharper decline.
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