The festive season is here and the overall environment
remains uncertain. This Diwali, we bring you 11 prime stock ideas (and a
couple of alternative assets too), which you can rely on to deliver
healthy returns. These recommendations reflect our strategy of sticking
to defensives and being selective with respect to cyclicals. It is
certainly not the time to be aggressive; instead adopt a pragmatic and
balanced investment approach. Safety will continue to assume importance
as structural issues both global and domestic are unlikely to get
resolved in the near term. We are hinting at Euro Zone debt issues,
looming risk of US recession, paralyzed domestic GCF, policy impasse,
sticky WPI and the overshooting fiscal deficit. In terms of sectoral
mix, we advise keeping equilibrium between defensive sectors FMCG,
Pharma, IT and cyclicals Banking, Auto, Metals. We are reasonably
confident that investment in the following 11 stocks on a portfolio
basis would provide higher return than the broader market over the next
year. Though in the near term Nifty could trade in the range of
4,700-5,200, it is likely to gradually move upwards in the medium to
long term.
We
also recommend investments in debt products especially NCDs as it
represents a great opportunity to get oneself locked-in at higher rates
and for longer time frame. Amongst the NCDs, we recommend instruments of
Muthoot and Manappuram due to their attractive yields and underlying
profitability of their business. As we believe that commercial interest
rate cycle has peaked, these NCDs may start trading at premium to par
value given the high coupons.
On
the commodity side, we believe Gold will continue to be a ‘Safe Haven’
and provide steady return for yet another year. The key factors that
would add to the shine of Gold would be heightened risk aversion on
deepening of crisis in Europe and US, loose global liquidity and
imperative weakening of the US Dollar. As the most economical and
convenient way of investing in Gold is through ETFs, we recommend Gold BeEs having the lowest expense ratio and high liquidity.
We expect this holistic investment approach during Diwali to not only give you smart returns but also ‘peace of mind’.
Happy Diwali!
