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Turbulent times for markets! Prabhudas Lilladher tells you how to build a winning stock portfolio

Turbulent times for markets! Prabhudas Lilladher tells you how to build a winning stock portfolio

Turbulent times for markets! Prabhudas Lilladher tells you how to build a winning stock portfolio
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By Pranati Deva  Sept 6, 2019 12:46:02 PM IST (Published)

With bears tightening grip on markets as foreign investors flee domestic stocks, most analysts have turned cautious on Indian equities and are advising investors to invest in stocks with strong fundamentals and stable management.

With bears tightening grip on markets as foreign investors flee domestic stocks, most analysts have turned cautious on Indian equities and are advising investors to invest in stocks with strong fundamentals and stable management.

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Brokerage Prabhudas Lilladher believes that the current slowdown is a combination of cyclical and structural issues and will take time to fade away. However, the latest announcements by the finance minister show the intent of the government to remove some of these irritants and structural issues, which will go a long way in preventing incremental damage, it said in a report.
"Although we don’t expect these measures to boost sagging rural demand and impact of widespread floods, it raises hopes of recovery from the third quarter of FY20," Prabhudas Lilladher said in a report.
The government has announced measures to boost the economy given falling growth rates and a slowdown in industries, ranging from automobiles to even consumer staples. Measures like removal of surcharge on FPI, delay in increase of registration fee on new vehicles, measures to review scrappage policy, linking home loan and vehicle loan rates to repo rate, increase in liquidity support for housing finance companies by Rs 10,000 crore and task force to finalize Rs 1 lakh crore infra investments should go a long way in reviving investor and consumer sentiments.
The brokerage recommends investors to use these turbulent times to build a portfolio of companies with moats in their business and ability to withstand technology disruptions. Maruti, Ashok Leyland, L&T, Siemens, HDFC Bank, Cholamandalam Finance are likely to be direct benefices of the same.
Prabhudas Lilladher sees maximum upside in UPL (36 percent), among largecaps, followed by UltraTech Cements (34 percent), L&T (32.9 percent), Petronet LNG (28 percent), HDFC Bank (26 percent), and Britannia (24.4 percent).
In midcap stocks, it prefers Shriram Transport, with an estimated upside of 46.6 percent. Crompton Greaves, Jubilant FoodWorks, and PI Industries are their other preferred stocks in this space.
This is the model portfolio suggested by Prabhudas Lilladher in this turbulent market:
The brokerage also recommends looking at beaten-down stocks like ITC, GAIL, Music Broadcast, Mahanagar Gas which may deliver robust returns of up to 66 percent in the near future.
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