Samvat 2071: Money making ideas by Raamdeo Agrawal, Nirmal Jain & Hiren Ved :: ET

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Leading investment gurus have turned positive on the Indian markets, and some of them of them even see it getting re-rated in the next one year, as reforms pick up pace and growth bounces back.

India is pretty much on track to get rerated, says Sunil Singhania, CIO Equity, Reliance Mutual Fund. "We are entering into a phase which is making India stand out. During the last four-five years in India, it was the reverse of the world," he said.

"The last 10-15 days of volatility, that we witnessed across the globe, was largely because of concerns that growth is slowing down, interest rates are rising and in India on the contrary wholesale price index has fallen to 2.5 per cent. So, in India we are seeing a big sort of standing out as far as macro-economic factors are concerned," said Singhania.

Samvat 2071 is beginning with India being in a sweet spot. It means India has a stable government with mandate to take bold decisions to prop up the economy, crude oil prices are declining (Brent trading below 85/barrel against $101/barrel a year back) and inflation is falling, which supports the argument.

If the Indian markets are on track to hit fresh record highs in Samvat 2071, the next big questions is: where should one invest? Which sectors to focus on and what stocks to pick?

Most experts are of the view that stocks in cyclicals, financials and pharma sectors will hog the limelight in Samvat 2071. More so cyclicals because of the reform push by the Modi government.

Experts see value in the markets even though we might have rallied over 27 per cent so far in the year 2014 for the next one year, despite global concerns.

"India is still a market where you can make money despite a tough environment, because there are a set of companies which are able to weather tough macros and still do very well. But there is nothing like having tailwinds with you and that is the difference between what we have seen in the past," said Hiren Ved, Director & CIO, Alchemy Capital Management.

"Cleary, auto is a leader of the pack in this bull market. They will also be one of the big beneficiaries of interest rate cuts down the line. I mean this sector does well typically in the early cycle, because it has got huge operating leverage," he added.

We have collated a list of ideas from industry experts on stocks and sectors for this Samvat 2071:

Raamdeo Agrawal, Managing Director & Co Founder, MOFSL

I can tell you about a particular set of companies in the auto pack. We are in an amazing situation in terms of auto companies, whether it is two-wheeler companies such as Bajaj Auto and Hero MotoCorp. In telco, it is Mahindra & Eicher. But the best of the auto boom is ahead. Just see the sales which have happened on the Dhanteras Day.

We are going to see some interesting times in the next five years for the auto pack. So one should have at least 20-25% of one's portfolio into these stocks, whether it is Maruti, Hero or Bajaj. You can have your pick, but you must have 20-25 per cent in auto per se and not much in ancillary, except for Bosch.

Nirmal Jain - Chairman, IIFL Group

In the IT space, one should look at Tech Mahindra. That can be one medium to long-term bet and even stocks like TCS or Wipro, if they correct. The market is very bipolar at this point in time, the event-based reaction always happens. So you can watch out. But, again, IT is one sector which, if you look at it from a two or three-year perspective, would be a good hedge.

In the midcap space we like Bajaj Finance. It is an NBFC that is doing very well. Performance has been extremely good and the sector also looks very promising. You can also look at stocks like Motherson Sumi in the auto ancillary sector or you can look at Havells India.

Amongst large cap or midcaps, investors can look at companies like Hero Honda and Maruti Suzuki in auto and in cement you can look at stocks like JK Lakshmi or even UltraTech Cement. One can build portfolio with these kinds of stocks.

Hiren Ved, Director & CIO, Alchemy Capital Management

The auto sector is a good bet. We have exposure in Hero MotoCorp in the two-wheeler space. We have Maruti in the four wheeler space and we have Tata Motors, which is a combination of a global play and a CV play in India. So, all the three will do well over a period of time.

The best valuation play today is Tata Motors. I mean in the entire Nifty you cannot get a stock which is still trading at single digit PEs on a forward basis. So that is where from a valuations perspective, there is a lot of juice left in that name. Use correction to enter the stock.

In the PSU space, even though we have not ventured there much, but there are certain better banks like SBI and BOB which we have looked at. They look much better than the other ones.

From a three to four-year perspective, we like Sundram Fasteners within the ancillary space, which is something that we bet on. Again that plays in very well if there is a CV cycle recovery. The company will do extremely well and at the same time they also have operations in China, in Germany, that were not doing well.

In the logistic space we like Gati. That is another stock that we have invested in. Again, I must mention here for the record that in all these companies we do have exposure for our clients in the portfolio management schemes as well as for ourselves. So that is a SEBI disclosure that I would like to keep.