Market decline in October left you worried? Axis Securities suggests this strategy to follow going ahead
Largecaps: ICICI Bank, Maruti Suzuki India, State Bank of India, Varun Beverages, Bank of Baroda, and ITC. Midcaps: Lupin, Federal Bank, Ashok Leyland, Relaxo and Footwears Smallcaps: CIE Automotive India, Westlife Foodworld, CreditAccess Grameen, JTL Industries, PNC Infratech and Kirloskar Brothers. The brokerage has booked profit in CCL products and added Westlife Foodworld.
Base case: The Indian economy stands at a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy. Axis continues to believe in its long-term growth story, supported by the emerging favourable structure as increasing Capex enables banks to improve credit growth. Strong earnings trajectory also continues in the Nifty 50 universe, it said.
It foresees Nifty EPS to post growth of 17 percent/13 percent in FY24/25. Thus, it maintained its Dec’23 Nifty target at 20,200 by valuing it at 20x Dec’24 earnings. The current level of India VIX is below its long-term average, indicating that the market is currently in a neutral zone (neither panic nor exuberance).
Bull case: "In the bull case, we value NIFTY at 22x, which translates into a Dec’23 target of 22,200. Our bull case assumption is based on the overall reduction in volatility and the success of a soft landing in the US market. Currently, we are near the peak of the rate hike cycle and may expect only one rate hike in the US market before the US Federal Reserve takes a pause.
If the market sails through the next 1 or 2 quarters smoothly, we would likely see the next level of triggers along with money flowing to EMs. This, in turn, would increase the market multiple," it said. Bear Case: "In the bear case, we value NIFTY at 18x, which translates into a
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