India Inc has been witnessing multiple headwinds. On
the macro front a) Inflation will
continue to increase as impact of fuel price hike is absorbed in the month of
July 2011, b) Interest rates would
rise further as we expect another 50bps hike by RBI over the next six months,
c) Fiscal deficit situation has
only worsened with government foregoing some revenues by cutting duties on
crude and petroleum products. Furthermore, poor governance and policy inaction
has weakened the political scenario. Many sectors such as automobiles and
cement are witnessing cyclical weak trends. We believe these factors could
exert pressure on Indian equity markets performance. Our case gets strengthened
by ~8% jump in Sensex and Nifty over the past 15 trading sessions.
The current rally, we believe, has given opportunities
in the market to cherry pick a few sell ideas. We have chosen stocks where we
see the macro outlook posing substantial risks to earnings growth. Further, we
have also picked stocks where the business risks are not too high but
valuations have reached beyond justification.
Stock
|
CMP (Rs)
|
Target (Rs)
|
|
ABB
|
861
|
724
| |
Ashok Leyland
|
53
|
45
|
|
DLF
|
237
|
210
|
|
GSK Pharma
|
2,318
|
2,016
|
|
Nalco
|
83
|
72
|
|
Titan
|
226
|
203
|
|
United Breweries
|
495
|
443
|
