The market always has stock opportunities whether it is a bull, bear or consolidative phase, say experts. It is for the investor to pick the right stock at the right time and the right price.
Ever since the government took a raft of measures, including a cut in the corporate tax rate, experts have turned more bullish, though the market seems to have already priced in expected earnings growth. The benchmark indices have rallied 13 percent since September 20, the day the corporate tax was lowered.
Most experts expect earnings and economic growth to pick up in the next financial year, though Q2 GDP pointed to a deepening slow down in the economy. The third quarter is unlikely to be better, considering the weakness across major sectors.
Experts do not see a major improvement in earnings this year and GDP growth could be well below 5 percent. They, however, do expect double-digit earnings growth next year, with around 6 percent growth in GDP though on a low base of last year.
"The disconnect between equity markets and economy could stay for some time as high-frequency indicators are not showing any signs of improvement, whereas markets could remain at elevated levels on hopes of certain sops likely to come in the forthcoming Union Budget," Kotak Securities MD & CEO Jaideep Hansraj said.
Better farm income, after a good monsoon, coupled with measures taken by the government and RBI could help improve demand in the calendar year 2020, say experts.
"The low base effect of this year could also help companies report decent revenue and operating profit growth in FY21. We expect Nifty 50 earnings to grow by 10 percent in FY20 and 27 percent in FY21. For the next three years, we are building in earnings CAGR of 18 percent for the Nifty 50 as compared to the previous three years CAGR of 8 percent," Hansraj added.
In December 2020, he expects the one year forward EPS of the Nifty to be around Rs 767, which valued at 17.5x gives a one-year target of 13,400 and a similar target for the Sensex will work to 45,500, he said.
Hence, experts expect that the rally, which restricted to a few stocks that lifted 13 percent return in short period, to broaden next year.
To benefit from this broad rally, brokerages pick these top 10 stocks that could give 14-121 percent return in the next 8-15 months.
Brokerage: Motilal Oswal