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Business News/ Markets / Stock Markets/  Stock market strategy: Emkay Global adds SBI, ONGC, TVS Motor; trims exposure to HDFC Bank, ITC in model portfolio
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Stock market strategy: Emkay Global adds SBI, ONGC, TVS Motor; trims exposure to HDFC Bank, ITC in model portfolio

Our overall stance remains biased towards Manufacturing, and we keep our Underweight call on Financials intact for now. We are staying with most of our winners – Zomato/ Delhivery/ Motherson Sumi, as we still see an upside from current levels, Emkay Global said.

Among PSU stocks, Emkay Global Financial Services adds SBI and ONGC, where it still sees value and potential trigger.Premium
Among PSU stocks, Emkay Global Financial Services adds SBI and ONGC, where it still sees value and potential trigger.

The domestic equity benchmark index Nifty 50 is expected to give moderate returns in the year 2024, says Emkay Global Financial Services and has a year-end target of 24,000 for the index. 

It expects smallcap and midcap stocks (SMIDs) to outperform and, in general, it prefers Manufacturing to Services. It expects non-linear returns in a dad-bod shape: a muted Q1 and Q4, with the returns being concentrated in April - September, coinciding with the election results, the full Budget in July, and rate cuts in the USA and India.

The brokerage firm has adjusted its model portfolio to reflect the post-earnings changes and some market trends. 

Also Read: Stocks to buy: Maruti Suzuki, M&M, TVS Motor among top picks in auto sector by HDFC Securities

“Our overall stance remains biased towards Manufacturing, and we keep our Underweight call on Financials intact for now. We are staying with most of our winners – Zomato/ Delhivery/ Motherson Sumi, as we still see an upside from current levels. From the PSU space, we add SBI and ONGC, where we still see value and potential trigger," Emkay Global said.

Key changes

  • The brokerage has trimmed exposure to HDFC Bank and IndusInd Bank, to add SBI as the strongest deposit franchise in a tight liquidity scenario.
  • It adds InterGlobe Aviation (IndiGo) because of the strong earnings upgrades (12.9% for FY25) – funded by trimming ITC.
  • We diversify the energy exposure by cutting Reliance Industries after its run-up – the OMCs look overcooked, so we add ONGC, said Emkay Global.
  • We exit from Hero MotoCorp on frothy valuations (PER of 20x on FY25E), and replace it with TVS Motor Company, which has a stronger volume outlook, it added.

Emkay’s Underweight (UW) stance on staples is enhanced with an increase in Industrials, in line with the ITC-to-Indigo shift. The rest of its sector exposures are intact. 

Also Read: ICICI Bank, Honasa Consumer, Zomato and more: Jefferies lists 26 ‘buy’ ideas for Indian markets

“Apart from staples, we are Underweight on BFSI, as we see long-term EPS growth and ROE challenges – the current liquidity tightness aids our position. We are Overweight (OW) on Materials and Consumer Discretionary (expressed largely through autos/ancillaries), to help us play the manufacturing and capex themes," said the brokerage house.

It is also Underweight on the IT sector, as it believes that entry valuations should be better for long-term outperformance.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 26 Feb 2024, 11:40 AM IST
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