Nifty likely to hit 11,500 in FY19; 7 stocks to buy for next 2-3 years: Harendra Kumar

We are expecting a 14 percent kind of return for the fiscal year 2019 is not an unreasonable expectation.

  

Valuations are on the mend and have reached reasonable levels, and the earnings yield is nearing attractive levels. We are expecting a 14 percent kind of return for FY19  and it is not an unreasonable expectation.

Valuations are on the mend and have reached reasonable levels. The earnings yield is nearing attractive levels. We are expecting a 14 percent kind of return for the fiscal year 2019. It is not an unreasonable expectation.

It will be difficult for the Bears as Bulls will have an upper hand. It is difficult to ignore an economy which is growing at 7.5 percent with the best demographic profile and on the reform path.

Our index target for the year is closer to 11,500. Reaching the level of 12,000 or breaching a new high on the Sensex is a possibility closer to FY19-end.

By then we would have the results of the general elections and if by then there are no surprises then the market would’ve started looking at the current incumbent government's the second term. So, current correction should be seen as more of an opportunity rather than something to stay away from.

It is best to take a top-down while picking stocks rather than a pure bottom-up one. We think we are in a very strong consumption phase of the economy and all proxies to consumption should be bought into.

In line with this thought, we think if FMCG, aviation, and cement sectors are likely to do extremely well. Within that, a Hindustan Unilever, Marico, Nestle, SpiceJet, Heidelberg Cement would do well.

Apart from the above names, I think the metal sector could be a strong out performer to the broader index. And, within this space Jindal Steel and Vedanta could be some of the names that one could look at.

In most bull markets midcaps have outperformed large gaps. This is more the keys in emerging economies. Small caps too have done well but lag midcaps overall. So it’s a prudent strategy to have a slightly higher share in midcaps if one wants to maximize their returns.

This statement would have been true some months ago but not now after the correction valuations are reasonable. Foreign institutional investors will chase growth and stability. India fits that bill and sees no reason why flows will not resume again.

Investors have converged to two of the very large PSUs I.e. SBI and BoB. There is a very little appetite for others. Frauds apart the NCLT process is moving fine and is a positive for space but this only not enough. We might see consolidation of PSU banks in the next term. Till such time triggers are absent.

As of today, it is still posturing by the US and Chinese governments. We do not know the end game yet. There will be some volatility but long-term impact. India is a largely self-contained economy. If anything we should track the INR and Yields which are the bigger drivers of valuations.

MORE WILL UPDATE SOON!!