The fast-spreading Omicron has raised concerns about the struggling economic recovery. In addition, several Indian states have imposed nighttime curfews and restrictions in an attempt to contain the spread of the new variant of the coronavirus, fueling investor concerns. This has increased the nervousness and volatility of the stock markets lately.
The two benchmarks, Nifty50 and Sensex, have fallen more than 2% in the past month and have fallen almost 5% in the past three months.
The Christmas cheer has quickly faded today, with major Indian clues slipping into the red. However, several market participants still believe that any decline should be considered, as the long-term story remains solid.
Several fund managers have come out on buying stocks with solid fundamentals while avoiding momentum games.
Here are the views of experts on the market and some stocks they believe have the potential to do well in 2022 and generate decent returns:
Arun Malhotra, Founding Partner and Portfolio Manager, CapGrow Capital Advisors
âInvestors should clearly be investing at lower levels with every decline in good quality stocks. From there, stock selection will be key, âsaid Arun Malhotra, Founding Partner and Portfolio Manager, CapGrow Capital Advisors.
According to Malhotra, bank and mortgage financiers, IT and telecommunications, real estate and construction materials should be doing well.
âWe prefer the private banks ICICI Bank, Kotak Bank and SBI in the PSU space. The banking sector is emerging from a long bear cycle and we believe we are at the start of a bull credit growth cycle as asset quality issues have been addressed with adequate provisions. On the contrary, there could be rewrites in a few cases, âhe said.
Malhotra likes Bharti Airtel when it comes to telecommunications because the majority of recent rate increases will impact EBITDA as operational leverage kicks in. He also likes Housing Development Finance Corp because it is the leader in finance mortgage and the real estate sector has gained momentum after a 10-year lull, he explained.
Suraj Nair, Director of Investments, MoatPMS
The markets right now are certainly slightly up. Although occasional fixes are inevitable, as our market is a great âleveler,â said Suraj Nair CIO of MoatPMS.
But, more than that, the effects of this COVID pandemic will bring a lot of uncertainties, therefore, “corrections are inevitable here and there,” he added. Most of the promoters of today’s bull market have, to a large extent, reduced their companies’ balance sheets and have also become much more efficient. “Corrections can therefore only occur on the basis of stock valuations, but we certainly don’t expect a systematic collapse like in 2008,” said Nair.
He believes that over the next 10 years the composition of Indian indices would change dramatically and that new companies would appear in the indices. Nair considers stocks such as Mahindra Logistics, Tejas Networks, TARC, Heranba Industries and Mahindra Lifespace to be good investments.
He pointed out that Mahindra Logistics, an end-to-end logistics player with its main business line of mobility and logistics, aims to grow more than four times over the next 5 years, while Tejas Networks which is in the global market for network equipment operating under Tata Management sees a huge opportunity in the telecommunications sector both in India and in global markets, with a new round of investments in the deployment of 5G and broadband by optical fiber.
Meanwhile, TARC is a real estate development company with sandbanks in the New Delhi metro area under competent management, new business incentives and deleveraging will drive growth to a higher trajectory, Nair said.
Heranba Industries, an agrochemicals company, aims to triple its turnover over the next 4 years and Mahindra Lifespace, the real estate arm of the Mahindra Group division, is planning an accelerated plan to triple its sales over the next 3 years. years. , he reasoned.
Nirav Karkera, Head of Research, Fisdom
“The signs of a more comprehensive restoration of public health, the easing of supply-side challenges, improved demand and political support are key factors that will contribute to the continued strength of the dashboards. corporate profits. In the near term, larger markets could experience high volatility due to adjusted economic policies, inflationary shocks and the potential for emerging public health risks. However, in the longer term, the story of the economic resurrection and Indian business remains intact, âsaid Nirav Karkera, head of research at Fisdom.
Karkera expects sectors strongly associated with investment cycles to do well in the near term. He believes that infrastructure, capital goods, basic materials and utilities will benefit from the imminent upturn in the public investment spending cycle.
In addition, as demand recovers and supply responds, financial services will also benefit from the rejuvenated flow of money into the economy as well as cyclical consumption, he added.
âSome private banks with a strong technology suite, a higher share of corporate borrowers, and strong lending practices offer great potential for turnaround in the coming year,â Karkera said.
Additionally, heavy manufacturing companies that have successfully deleveraged over the past year and have the ability to scale up their existing operations may fare well, as operational efficiency also contributes to the bottom line, he added.
Rohan Mehta, CEO and Fund Manager, Turtle Wealth
âPublic sector enterprises (PSUs) have been underperforming for the past decade and, with government leadership, they can perform better. In fact, some companies are doing well and with government support these companies will have a better risk / reward ratio, âsaid Rohan Mehta, CEO and Fund Manager, Turtle Wealth.
Mehta likes Allcargo Logistics which has a strong structural history and trades at an attractive valuation and also likes Power Grid Corporation of India which has around 75 percent market share in the power transmission business and offers a good dividend.
Another stock he believes will perform extremely well over the coming year is Polyplex Corporation. The company is a good play on the history of electric vehicles (EVs), the valuations are reasonable, the management is decent and the dividend yield is also attractive, which makes Mehta believe that Polyplex is a good idea to invest. .
He believes the State Bank of India will do better than its peers, which would make the stock a sound investment option.
Finally, he believes Bigbloc Construction, which makes autoclave building blocks and aerated concrete bricks, has the potential to grow tremendously.