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Motilal Oswal Report
The Nifty-50's rise to a new high was driven by a favorable blend of healthy macro and micro conditions, moderated inflation and falling commodity prices, peaking global interest rates, and six consecutive months of foreign institutional investor inflows with strong retail participation led by an upbeat sentiment.
As the benchmark soars to a new high, the Nifty-50 trades at a 12-month forward price/earning of 18.6 times, at 7% discount to its own long-period average. Further, it also trades at a 12-month forward price/book of 2.9 times, at 8% premium to its LPA. We reckon the upside from here will be a function of stability in global and local macros and continued earnings delivery versus expectations.
Moreover, we note that during the last five General Elections (1999-2019), the Nifty-50 rallied 10-32% six months prior to the announcement of election results. India will be going into General Elections in March-May 2024.
We remain over weight on financials, consumption, and automobiles. We are under weight on metals, energy and utilities and 'Neutral' on IT, healthcare and telecom within our model portfolio.
Top ideas:
Largecaps –
ICICI Bank Ltd., ITC Ltd., Larsen and Toubro Ltd., HCL Technologies Ltd., Titan Company Ltd., Sun Pharmaceutical Industries Ltd., Avenue Supermarts Ltd., Mahindra and Mahindra Ltd., Bank of Baroda, and Zomato Ltd.
Midcaps and Smallcaps –
The Indian Hotels Company Ltd., Ashok Leyland Ltd., Godrej Properties Ltd., APL Apollo Tubes Ltd., Mahindra and Mahindra Finanical Services Ltd., Metro Brands Ltd., Kajaria Ceramics Ltd., CreditAccess Grameen Ltd., Angle One Ltd., and Lemon Tree Hotel Ltd.
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