India’s stock market is facing tough times, with the Nifty 50 index down 12% from its highest point. This drop is caused by investors pulling their money out and rising U.S. bond yields affecting market mood. Despite these challenges, HSBC believes there are some promising stocks to consider. They listed five companies: Dixon Technologies, Maruti Suzuki, PB Fintech, Godrej Properties, and LTIMindtree that could do well even when the overall market struggles.
HSBC notes that the recent budget aimed at boosting spending might not be strong enough to change people’s mood about the economy. However, keeping spending in check allows the Reserve Bank of India (RBI) to be less strict with interest rates. With inflation going down, the RBI has already lowered interest rates for the first time in five years. More support for the economy might come soon.
The market remains under pressure, with foreign investors selling off more than $20 billion since September. Many companies reported weak earnings in the last quarter, with 42% not meeting expectations. It’s predicted that growth will stay slow for at least two more quarters, making it tough to achieve a 15% earnings growth goal by 2025.
Despite these challenges, HSBC highlights specific companies that could succeed thanks to industry trends, solid performance, or smart strategies. These top picks include companies ready to grow through exports, benefiting from a weaker Indian Rupee, or those ready to take advantage of new government policies.
1. Dixon Technologies: Expected to gain from government support and growing demand in mobile and IT manufacturing. This stock has gained over 132% in the past year, even though it recently fell by 12.8%—now trading at Rs. 14,568.65.
2. Maruti Suzuki: A strong player in India’s auto market, particularly for electric vehicles. The stock has risen by nearly 19% over the last year and still offers growth potential, currently at Rs. 12,754.95.
3. PB Fintech: Parent company of PolicyBazaar, it’s likely to grow much faster than its competitors in online insurance. Although it surged 63.7% in the past year, it recently dropped 18%, now trading at Rs. 1,525.55.
4. Godrej Properties: With strong finances and a wide reach, it can handle slowdowns in real estate. However, it has seen a decline of 10.5% over the past year, down to Rs. 2,021.05.
5. LTIMindtree: Set to benefit from a rebound in IT services, especially with more banking sector deals coming. The stock increased by 4.5% in the past year, trading at Rs. 5,704.75.
HSBC remains cautious about the overall market, suggesting that a real recovery will need more stable earnings and further help from the RBI. They also expect another interest rate cut in April, but warn that high stock prices might continue to decrease until growth picks up again.
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