Nifty is touching 20,936. Which shares to buy and sell?

In their October 2022 report, Prabhudas Lilladher’s analysts Amnish Agarwal and Anoushka Chhajed said, “Indian Market Are currently riding a roller coaster as global headwinds are dragging on strong domestic fundamentals. Following rising gas prices and disruption in global supply chains: russia ukraine war are driving inflation At 15-20 year highs in most developed markets. As a result, the Fed and other central banks are likely to push interest rates even higher in the coming quarters. Shortage of gas and rising interest rates are likely to impact demand as A. growing fear recession in America and Europe.”

On Friday this week, the Nifty 50 was down 17.15 points or 0.1% at 17,314.65. However, overall the benchmark is up over 3% in the week.

While there has been a significant correction in crude, metal, palmoil and various agricultural commodities, analysts at Prabhudas Lilladher do not rule out an intermittent rally in the coming months.

“We expect the global macro-economic situation to remain volatile in the coming 3-6 months until the end of the Russia-Ukraine war,” analysts said.

In terms of monetary policy, RBI is raising the repo rate by 190 basis points cumulatively for the fourth consecutive month. At present the policy repo rate is 5.9%. The rate hike is in line with US rates. However, the gap between 10-year tea bills in India and the US has come down to a 13-year low.

Analysts at the brokerage said in the note, “We believe that there could be further downside pressure on the INR in the coming months as a result of slower global growth and volatility. Domestic demand in discretionary sectors has remained stable, though rural demand has slowed down.” There is no significant reversal of the trend so far. While the RBI expects a moderation in inflation in another two quarters (currently ruling above the upper limit), we remain cautious about the same global adversity and liquidity pressures “

The festive season will pave the way for strong growth in the second half of the current financial year.

The note said, “Our channel investigation reveals strong pend-up demand in the first normal festive season after 2 years. We believe a strong festive season will set the stage for strong growth in 2H. “

As per the note, analysts believe that structurally the story is 1) led by IT services with strong global demand 2) expected gains from China + 1 supply chain realignment in pharma, chemicals, textiles, etc 3) CAPEX’s Increasing visibility Ublik Infra (Rs 1400 billion), PSUs, PLIs (Rs 220 billion), Defence, Digitization and Data Centre.

Thus, Prabhudas’ note said, “We expect the current state of volatility to be temporary and recommend investing in fundamentally strong stocks for medium to long term gains.”

Setting a base target of 20,936 for Nifty 50, analysts said, “We anticipate Nifty EPS at 855.2 and 963.4 and project FY25 EPS at 1069.2. This is for FY23/24/25.” Shows a growth of 12.1/12.7/11.0%. Our estimates of 3.5% and 5.6% and 8.3% are lower than the consensus EPS estimate. Nifty is currently trading at 19x one year PE which is a discount of 7.8% Which is 20.5 on the 10-year average.”

Therefore, in our base target, analysts said, “We value Nifty with an average PE of 20.5x last 10 years at Rs 1016 on 24 September EPS, and arrive at Nifty target of 20936 (20057 ago) on 23 September” “

It is noteworthy that Nifty 50 is also likely to reach 22,918 points. The stock brokerage has increased its target in bull case, “We value Nifty at 10% premium to 10-year average PE (21.5x) and provide a target of 22918. (22063 ago).”

But in case of bears, Prabhudas Lilladher rated Nifty 50 at 20% discount to 10 year average and hit a target of 15800 (16046 ago).

Where to invest in share market?

Banking Stocks:

Analysts at Prabhudas Lilladher are overweight on banking stocks. The note said, “We place more weight on banks with higher credit growth by 220 bps (310 bps earlier) and expected growth in NIMs in the rising interest rate scenario. We are also looking at all front-line banks such as HDFC, ICICI, Kotak, SBI. We maintain more weight on banks. , and Axis Bank. We shift slightly from 50bps and 20bps with our load in KMB and SBI.”

HFC/NBFC:

Stock brokerages have less weight in this basket.

The note said, “We place a lower weight on NBFCs. We reduce the weighting on HDFC by 70 bps but increase the weightage on BAF by 20 bps. However, we recognize that there is a risk of P/BV de-rating to BAF. If it is asked to convert. A bank at a certain level.”

Health care:

An overweight trajectory has been established over this area. In the report, analysts said, “We maintain overweight on healthcare and increase weightage by 20 bps on Cipla on the prospects for improvement in US inhalers, Revlimid added. Given the growing insurance incidence and health awareness, we The major hospitals remain structurally positive on the chains.”

Information Technology Services:

Giving a view of overweight on the segment, the note said, “We maintain the overweight (260 bps) on IT even as we cut the weight by 100 bps. We believe that the order Book remains healthy and there is no dent in the long term growth story in ERP, Data Analytics, Digital, Artificial Intelligence, Supply Chain etc. We believe margin pressure is temporary in near future and expected slowdown/slowdown in USA It is not expected to have any significant impact on the growth trajectory of Indian IT companies.

Automobiles:

Analysts maintain 220 bps overweight on automobiles as they expect the current cyclical correction to last for the next 2-3 years.

“We believe that the exit from the semiconductor issue, moderation in commodity prices, and strong pent-up demand are positive. The revival in the entry-level segment may continue.

growth rates. However, we believe that players with higher investments in the US and Europe may underperform in the near future.

Consumer:

Analysts are weighing less than 300 bps here as the recent rally has curtailed expected gains from the commodity price

Prices have been corrected, even though volume growth at Staples remains sluggish.

Analysts said, “Discretionary segments are outperforming given strong demand in QSR, Apparel, Travel etc. We prefer consumer discretionary stocks over Staples in the next 2-3 period.”

Capital Goods:

He has put more weight on the sector by 360 bps and expects the industry to report strong growth in the next 3-5 years.

In addition to front-line stocks, the note said, “We expect meaningful gains in consumables stocks in this universe. We retain L&T, Siemens and ABB in our model portfolio.”

oil and gas:

Analysts of Prabhudas maintain a low weight on oil and gas and retain allocation only on Reliance in this universe.

Telecom:

The stock brokerage included Bharti Airtel in its model portfolio as a structural play on rising data usage across ecom, infotainment, etc and expects sustained growth in the coming years.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.