Indian Stock Market Next Week: US Central Bank Federal Reserve decided to increase interest rates by 75 basis points this week. It is currently 4 per cent and it is believed that after an increase of 75 basis points in December, it can be increased to 4.75 per cent. The UK has also decided to raise interest rates. But the reality is that expenditure is not coming down, due to which inflation is high. If the economy is not slowing down despite 4% interest rates, then how can there be a recession. Despite the Fed Reserve’s quarterly rate hike, the Nifty has seen a rise. And after the next rise, Nifty will be trading at all time high.
Leaving America and Dow Jones and talking about India, even if there is a recession, then India can become a great investment option. India will not be affected by recession due to domestic consumption. The bubble of the real estate sector in China has burst. America has asked its companies to exit China, which has brought opportunities for India. Now Made in India is written on the iPhone instead of Made in China. This is only the beginning. Soon it will also be seen on white goods, cars, electronics and textiles. We have started this with defense exports of Rs 13000 crores.
The size of India’s equity is $3.5 trillion but the registered investors are 11.74 million which is 8.38 percent of the population. Foreign portfolio investment in India is only $560 billion, which is 16 per cent of India’s market cap. If there is a new investment of $ 500 billion in India, then imagine where the market will go. This investment will come in large cap. Also, new investment will come in metals, auto, consumables. If this happens, then investing in micro caps is the best.
My top picks among A grade companies are Tata Power, Tata Motors, Mahindra Financial and Tata Communications. I would like to name Akar Auto in B grade which has 4 plants in Aurangabad Waluj. This stock is at a market cap of Rs 70 crore. Bharti airtel share was Rs 400 then I had advised to buy now all are buying at Rs 830. I see opportunity in Cera, Oriental Aromatics or VIP which CNI has spotted.
I also see opportunity in some penny stocks, which can prove to be multibaggers. Suzlon and Yes Bank should be ignored. Aanchal Ispat and Triveni Glass should be kept under watch. These stocks can prove to be multibaggers. Promoters are buying in Global Offshore in which FPI investment has increased. Tata Power was at Rs.64 and Tata Motors was at Rs.62. Since then we have taken positions on these stocks and are still bullish on it.
(These are the personal views of the author)
Kishor P Ostwal
CNI Research Ltd.