Indian stock market remains attractive, say experts, suggest stocks to buy for long term

Buying was seen in a majority of sectors as investors remained optimistic about India’s robust growth story and anticipation of imminent rate cuts in the upcoming months.

Indian stock market remains attractive for medium to long term

Experts observe the outlook for the Indian stock market is attractive in the medium to long term due to its healthy economic outlook.

The Indian economy grew 8.4 per cent during the October-December quarter of the current financial year.

Also Read: India’s Q3 GDP growth at 8.4%, beats D-Street estimates; economy grows at fastest pace in 6 quarters: 5 key highlights

Several global financial firms and rating agencies have been bullish on the Indian economy of late. Fitch Ratings has raised its forecast for India’s economic growth to 7 per cent for the next financial year (FY25).

Also Read: Fitch raises India FY25 GDP forecast to 7% from 6.5%

Recently, rating agency Moody’s raised its 2024 growth estimate for India to 6.8 per cent from 6.1 per cent. The Reserve Bank of India’s GDP growth estimate for FY24 is 7 per cent, while the International Monetary Fund’s (IMF) forecasts 6.7 per cent.

Also Read: Moody’s upgrades India’s 2024 GDP growth forecast to 6.8%

According to Harsha Upadhyaya, CIO-Equity, Kotak Mutual Fund, robust economic growth trajectory, stable financial indicators, vibrant banking and real estate sectors, surging exports as well as vehicle sales and infrastructure and capex surge are the five key factors that keep investors positive about the domestic market.

Upadhyaya underscored that India is on a strategic path to becoming the third-largest economy by 2027, with a projected GDP of $5.4 trillion. This growth trajectory places India at the forefront of global economic expansion, distinguishing it from its peers.

Moreover, the country boasts consistent GST collections above ₹1.6 lakh crore, signalling strong economic activity. Coupled with a moderate household credit to GDP ratio, these indicators reflect a balanced and healthy economic environment, Upadhyaya pointed out.

He further said that with government-led initiatives, India is witnessing a significant surge in infrastructure development and capital expenditures, key drivers for long-term economic growth and productivity enhancement.

Stock to buy

With the domestic market outlook poised favorably for the medium to long term, numerous analysts are advocating that the current juncture presents an opportune moment to invest in high-quality stocks. Mint has curated the recommendations of several analysts to assist investors in navigating their investment decisions. Take a look:

Sandeep Raina, Executive Vice President-Research, Nuvama Professional Clients Group

Raina recommends buying shares of Repco Home Finance (target price: ₹590), and Devyani International (target price: ₹214).

He pointed out that the stock of Repco Home Finance is available at an attractive price, with improvement in credit growth, cost-to-income ratio, one of the lowest credit costs and one of the highest return ratios.

“Given the attractive valuation and expected improvement across various operating and efficiency parameters, the re-rating in the stock will continue,” said Raina.

For Devyani International, Raina expects it to grow aggressively using internal accruals and to achieve an ROCE (return on capital employed) of over 20 per cent by FY26 from 11 per cent in FY18.

Kripashankar Maurya, AVP-Research at Choice Broking

Maurya said various good quality stocks are available at 15-25 per cent down from their peak.

“As the long-term prospects of the Indian economy remain robust. With structural reforms and demographic dividends in play, the stage is set for sustained growth in various sectors. We have identified several stocks within our coverage universe that offer a better risk-reward ratio coupled with healthy balance sheets, and promising growth stories. We recommend investing in the following stocks with a 1-2-year investment time horizon,” said Maurya.

From the auto space, Maurya recommends buying Hero Motocorp, Eicher Motors, Uno Minda, Sansera Engineering and Gabriel India.

From the defence sector, Maurya’s recommendations include Hindustan Aeronautics, BEL and Centum Electronics.

Maurya is also positive about select cement stocks, including Ramco Cement, Dalmia Bharat and JK Lakshmi.

From the pharma sector, Maurya is bullish on IPCA Lab and Concor Biotech while from the healthcare segment, he is positive about Narayan Hrudayal, Apollo Hospitals and Yatharth Hospitals.

Sunil Jain, Head Of Research (Retail) at Nirmal Bang

Jain recommends buying the stocks of ITC (target price: ₹518), Time Technoplast (target price: ₹300), REC (target price: ₹675), Archean Chemical Industries (target price: ₹792) and Venus Pipes & Tubes (target price: ₹2,250).

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 14 Mar 2024, 03:04 PM IST