Diwali 2023 Stock Picks: Reliance, HDFC Bank, ZEE among top 10 buys from Geojit Financial Services

The gains in domestic markets over the last year comes on the back of strong macroeconomic fundamentals, healthy corporate earnings growth and foreign fund inflows.

In Samvat 2080, the markets are expected to remain volatile and investors will watch out for a slew of geopolitical events around the globe. The general elections in India would be one of the key triggers for the markets.

Also Read: Diwali 2023 Stock Picks: Reliance, GAIL, Dr Reddy’s among top 10 buys from HDFC Securities

However, analysts are bullish on the domestic markets given the resilient macros of the Indian economy.

“The market is likely to witness a major rally before the next Samvat. Once there is some clarity on the outcome of the next general elections due before May 2024, markets will rally. The resilient Indian economy and good corporate earnings will attract big investment into the market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

He believes if the US bond yields continue to decline, the foreign institutional investors (FIIs) will also become buyers in the domestic market. 

“The bull case scenario is a flood of institutional money – both domestic and foreign – and a stable government triggering a big rally in the market taking the Nifty beyond 23,000 by next Samvat. Large caps across sectors will lead the rally,” said Vijayakumar.

Also Read: Diwali 2023 Stock Picks: Motilal Oswal lists Titan, M&M, among 8 other fundamental picks for this festive season

According to him, the likely outperformers are financials, capital goods and automobiles, while the midcap IT stocks will continue outperforming the largecaps in the sector.

Here are Diwali stock picks by Geojit Financial Services:

Reliance Industries exhibited resilience amid energy market fluctuations. Going ahead, its retail business, Jio and entertainment will be pivotal catalysts for future growth. Additionally, the company’s robust cash flows and proactive pursuit of new opportunities, particularly in clean energy, contribute to a promising long-term outlook, Geojit Financial Services said.

HDFC Bank

Geojit Financial Services expects HDFC Bank’s net interest income (NII) to have bottomed up and anticipates a gradual recovery in the near term. The merger with HDFC Ltd is likely to be beneficial in the medium to long term, while valuation has become attractive, the brokerage said.

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Geojit Financial Services expects demand to pick up from H2FY24 led by longer festival and marriage season while expansion in the distribution network to support the decorative volumes. Despite a spike in oil prices, superior product mix and pricing power will aid earnings in the coming quarters.

Zee Entertainment Enterprises’ subscriptions segment displayed a strong performance, and the brokerage house expects the ad revenue to improve as advertising spending by the companies has started picking up. Moreover, merger between ZEEL and Sony Pictures Networks will enhance margin expansion by reducing content cost.

Increase in market share across the US and European market, higher traction for biosimilars with new product launches and increased investment in R&D augur well for future performance, Geojit Financial Services said.

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The company anticipates achieving robust revenue growth and profitability in the upcoming festival season, driven by new screen additions and a strong content pipeline, resulting in improvement in the Average ticket price and a robust Spend Per Head (SPH) on food, the brokerage highlighted.

PI Industries

With a sustainable margin profile of over 25%, Geojit Financial Services expects the company’s earnings to grow by 20% over FY23-25E. The company’s strong focus on Diversification, R&D, strategic acquisitions, CSM order book, and export growth are set to support its future performance, said the brokerage firm.

The brokerage believes demand and margins to improve aided by upcoming festive season and lower input price. The long-term outlook remains positive given rising middle-income households, improvement in the real estate sector, and easing input prices, along with TTK’s strong brand recall.

Also Read: Diwali 2023: Up around 10% in Samvat 2079, will Nifty give double-digit returns in Samvat 2080?

Amara Raja Energy & Mobility 

A strong value buying opportunity in the battery segment is expected to support long term visibility. Investment for technological up-gradation in the lithium ion project for 2W/3W batteries is progressing as per schedule and has started supplying lithium battery packs for 3W applications, Geojit Financial Services noted.

Superior product mix in the fan segment and higher contribution from the ceiling lights are likely to boost the company’s revenue in the medium to long term. The strategic initiative taken by the company to expand the market through innovative launches and cost optimization will result in increased profitability.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Updated: 09 Nov 2023, 01:38 PM IST