HDFC Securities' 2020 outlook for major sectors and stock ideas

SUMMARY

Indian stock market performed well in the year 2019, with Sensex giving 13.7 percent returns while Nifty rising 11.3 percent so far. Going ahead, markets will track issues such as global growth, domestic inflation and growth in Q4FY20, fiscal balance and budget, monsoon, easy money and risk on sentiments and corporate earnings recovery, HDFC Securities said. Here are some stock picks among various sectors from HDFC Securities.

By Ankit Gohel Dec 19, 2019 12:45:45 PM IST (Updated)

Release of funds from the NCLT will bring profits to the banks through the recovery of loans. Retail and Agriculture could bring more pain if the urban job situation and agriculture sectors do not show a revival soon.

Indian cos have done well to contain the erosion of legacy business and grow digital –espmobile and cloud. There is increasing use of non-linear technologies like AI, robotic process automation and machine learning.

Autos have taken the maximum hit with passenger car (-17%) and CV sales being hit the most (-24%). We like Bajaj Auto and Hero Moto.

ITC is the cheapest consumer stock, despite its size and pedigree. We believe markets are overly worried about its sin industry status, competition from illegal cigarettes coupled with the fear of tax hikes and are ignoring the near term volume growth trajectory.

Upstream players have lost equity value as oil prices are soft.

It is further hit by a similar slowdown in the individual home building segment, which accounts for the bulk of cement consumption.

The sector has underperformed Nifty by 65 percent over past 3 years led by sharp 40 percent reduction in earnings. US accounts for 35-50 percent of revenues for large Indian companies that have invested heavily in that market.

These stocks have suffered over the trailing year primarily owing to concerns on their working capital cycles.