Most global markets declined in October; MOSL suggests these stocks now

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JSW Steel, Reliance Industries and ICICI Bank is driving the overall performance. The spread of earnings has been decent, with 74 percent of MOFSL Universe either meeting or exceeding profit expectations. However, growth has been led by the BFSI, O&G, and Automobile sectors, it reviewed.

All major sectors ended lower in October. PSU Banks (-6 percent), Telecom (-6 percent), Metals (-6 percent), Utilities (-5 percent), and Healthcare (-5 percent) were the top laggards, while Real Estate (+5 percent) was the only gainer. Despite the decline in October, the brokerage informed that half of the sectors trade at a premium to their historical average.

- The Technology sector is trading at a P/E ratio of 22.7x, a 15 percent premium to its long-term average of 19.7x. Demand remained weak through 2Q, with key verticals and major geographies remaining under pressure. Although the deal TCVs remained elevated, the revenue conversion was a challenge due to a cut-down in discretionary spending and reprioritisation projects.

- The Private Banks sector is trading at a P/B of 2.2x, an 11 percent discount to its 10-year average of 2.5x, with ROE near a 10-year high of 15.5 percent. Loan growth remains robust, primarily led by steady progress in the Retail and SME sectors. Corporate segment also saw some recovery, while growth in select sectors like personal loans and real estate has been robust at 31 percent and 39 percent YoY, respectively.

H1FY24 saw positive signs as systemic credit expanded 7.9 percent YTD. Systemic loan growth remained healthy at 14.7 percent YoY in Oct’23. - Healthcare is trading at a P/E of 25.5x (3 percent discount), marginally below its 10-year average of 26.3x.