High Conviction Stock Ideas By Nirmal Bang

Inadequate earnings pick-up, FII-related tax problems, push-back of the upturn in capex cycle and forecast of yet another poor monsoon – all these have been reasons for the cuts we have witnessed in Indian equity market in recent times. BSE Sensex, Mid-cap and Small-cap indices are down 8%, 5% and 6%, respectively, from their peaks. While some market deflation is justified in light of the postponement of earnings recovery, we believe that some of the negatives listed above are transient in nature. The current volatility gives an opportunity for investors to buy into good quality stocks at prices that are 20%-40% below their 52-week highs. Despite some of the negatives highlighted above, a number of things have turned out well for India over the past 12 months such as lower crude oil prices, controlled food inflation despite unseasonal rains and erratic monsoon, a productive legislative phase that led to the clearance of a number of long-pending bills, etc. While a lot of work still needs to be done, we remain positive on governmental action and on our outlook on the market. At NBIE, we cover a number of structural and high quality growth stories across various buckets of market capitalisation .We have put together a list of such stocks which we believe have been unduly punished and one should consider buying. These specific ideas come under categories such as urban consumption recovery, manufacturing, exports, credit pick-up, rise of the digital economy, etc.

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