India Inc.'s earnings are bound to be volatile for the next few quarters due to disruptions from the Goods and Services Tax and weak underlying economic activity, said IDFC Securities in its 'India Strategy' report.
While the long-term story remains intact, near-term disruptions will lead to slower than anticipated earnings growth, the report said, leading to a "range-bound" market in the near-term. The firm maintained its Nifty target at 9,825.
Keeping the sectoral trends and the economy in mind, the report highlighted their top stock picks with Oil and Natural Gas Corporation being the only new addition.
While ONGC had underperformed the market on back of low crude prices and stress on their balance sheet, the current valuation does not take into account the "impressive group oil and gas output, the material boost to earnings from the start-up for the KG basin asset and the traction from ONGCL Petro Additons Ltd. over financial year 2017-18 to the estimated addition in FY19,” the report said.
Here are IDFC Securities' top picks:
- Hero MotoCorp
- Hindustan Petroleum Corporation
- Motherson Sumi
- Hindalco
- Aurobindo Pharma
- UPL
- Bharat Electronics
- Ashok Leyland
- SpiceJet
- ONGC
KPR Mills Ltd. was dropped from the list due to “increasing uncertainties about cotton production”. The ‘top sells' list includes Bajaj Auto Ltd., United Spirits Ltd. and DLF Ltd.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
