In the first week of December, a host of brokerages picked their top stock picks for the last month of Calendar 2022. SBI, Varun Beverages, Maruti Suzuki, ICICI Bank, Ashok Leyland and IndusInd Bank are among stocks which were recommended by more than one brokerage. This is even as analysts broadly see upside capped for Nifty in the near future.
Axis Securities likes ICICI Bank, Tech Mahindra, Maruti Suzuki, SBI, Infosys and Bajaj Finance as its top large cap picks. It prefers Dalmia Bharat, Polycabs India, Federal Bank, Varun Beverages, Ashok Leyland and APL Apollo in the midcap space. HealthCare Global Enterprises, Praj Industries, CCL Products and PNC Infratech are its preferred smallcap picks.
Emkay Global said is overweight on large caps such as ICICI Bank, IndusInd Bank, M&M, Maruti Suzuki while it has buy ratings on mid and smallcap stocks such as ABFRL, Ashok Leyland, Escorts, Karur Vysya Bank, UNO Minda, Varun Beverages, and Westlife Development.
This brokerage has increased its rating for the metals sector to 'equal weight' from 'underweight' earlier, driven by firming metal prices in response to measures announced in China to revive the property sector, anticipation about re-opening of industrial activity in China and weakening dollar of the dollar, driving risk on sentiment.
Motilal Oswal's preferred large cap picks included Reliance Industries, Infosys, ICICI Bank, SBI, Bharti Airtel, ITC, Maruti Suzuki, Titan Company, UltraTech Cement and Coal India. It also likes IndusInd Bank, Apollo Hospitals and Macrotech Developers. Among its midcap and smallcap picks are Varun Beverages, IDFC First Bank, Ashok Leyland, Jubilant FoodWorks, Metro Brands, Vinati Organics, Angel One, Cams Services and Lemon Tree Hotel.
Jefferies has suggested 19 top buys ideas including ICICI Bank, SBI, IndusInd, ICICIC Prudential Life, Tata Motors, Maruti, TVS, L&T, Thermax, Concor, Lodha, Godrej Properties, GCPL, Zomato, Sun Pharma, Indian Hotels and Supreme Industries, among others.
KR Choksey Shares & Stocks prefers Cholamandalam Investment, Godrej Consumer Products, HDFC Bank, Hindustan Unilever (HUL), Tata Consumer Products and UltraTech Cement.
IDBI Capital Makets likes stocks such as Ultratech Cement, Cholamandalam Finance, Bata India, Kajaria Ceramics, City Union Bank, PNC Infratech, Zensar Technologies, Safari Industries and Newgen Software.
Sub-par Nifty returns ahead?
ICICI Securities in a strategy note said equities have entered ‘high optimism zone’ as fear (VIX) has slumped and P/E ratio touches 20 times, which has set stage for sub-par returns ahead.
"Negative correlation between forward P/E multiple and 1-year forward returns for the NIFTY50 index. Current valuations imply sub-par 1-year forward returns for Nifty," it said.
Emkay said it sees upside capped for the index given expensive valuations of 20.3 times on a forward 12 months basis forward own-history, especially in view of continued geopolitical risks; and risk of higher crude prices - OPEC supply cuts, EU potential embargo on Russian oil.
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