My Samvat 2080 Picks!

In the financial world right now, things seem a bit up in the air – markets seem to be stuck in a long consolidation period or bouncing around with high volatility. The expected interest rate cuts in the U.S. are taking longer than expected, thanks to a job market that just won't quit and steady economic growth. But hey, this delay might actually be a good thing. It gives us a chance to slowly gather stocks in sectors that are undervalued, potentially scoring some extra returns in the coming year.

Looking ahead, both India and the U.S. are likely to see interest rate cuts in the latter part of the year, which could shake things up in the markets. Over in India, elections in some states are expected to stir things up, giving us a peek into where the political winds are blowing.

In the U.S., the big boost for stocks is predicted to come from the tech sector after the interest rate cut. It's like after two years of holding back, there's a flood of free capital waiting to be unleashed, especially in the tech space.

As we keep our eyes on the economic scene, a few things that stand out as key indicators. Inflation rates, job market, consumption trends in India, capital spending patterns, and how much the world is buying from India – all these factors I will be keeping on watchlist.

With all these moving parts, I feel that both Indian and U.S. markets might not just hit their previous all-time highs but could even set new records. It's like the markets are gearing up for a sequel, and the plot is getting interesting with economic factors, policy decisions, and elections all playing their part. So, the expectation of reaching new all-time highs is adding a dash of excitement to the unfolding story of market trends.

My Samvat 2080 Picks -

1. HDFC Bank - Let's get to the basics. Largest Private bank in the fastest growing economy in the world. Can economy grow and sustain without the growth of its key banking players? I think if you have at least 90% clarity on this question, then you would take the call properly. There has been a buzz around stating due to its merger the bank cannot grow at its original pace. I agree to this point, with such a large AUM it is difficult for the bank to disburse the deposits and get returns, but I am not expecting it to grow at 20-25% CAGR at which it used to grow. I am expecting a nominal 10-15% annual growth. Then the question arises of re-rating of the stock due to decline in growth expectations. Right so let the valuations and future expected come down, but nobody can justify the current valuation it is present at, it's median PE is 27 and it's current PE is at 16.6 which is even lower than what it was during 2008 Crisis, does it make sense? and even if not PE it's PBV is also at 2.9 with median 4.4. This is a cyclical play I believe which is played currently in the market, as a result all Private sector banks had muted growth over the past year. Hence this is an obvious bet for me, considering the India Growth Story intact.
   

2. SBI Cards - This is yet another bet on the structural change in India's financialization of savings and rise in the credit spending in the economy. Currently 5% Indians are using credit card and I see this penetration to increase as premiumization trend will pick up pace post the consumption consolidation seen currently. Coming to the company, SBI Cards since its IPO has given muted returns with Sales and Profit growth of 14% and 22% respectively. In the near term, I expect some stress in the growth as the interest rates are still peaking, but once free credit is on rise, SBI Cards will benefit from it. This won't be a one year bet for me but will be interesting how it performs in the coming year. Risk is UPI.
   

3. Aavas Financiers - Only two lines. India will see a rapid rise in Housing sector especially in tier 2 & tier 3 cities, and Aavas will benefit from it as it is a housing finance company. One major concern currently is high valuation as a result it is beaten down a lot, hence this is a valuation swing play for me rather than holding for the structural 2-3 years.
   

Stay tuned for Part 2 of Samvat 2080 picks.

Thank you for reading.

Disc. - Not an Investment advice, purely for education purposes.