stock picks of the new year 2017

Market View: The recent action by the Modi government to discontinue the old INR 500 and INR 1000 notes as legal tender was a much needed reform for the Indian economy as this has directly attacked the black money hoarders. Although, the short-term negative impact on the Indian market cannot be ruled out. Due to lower liquidity in the economy demand of goods and services will get adversely impacted. This will get reflected in the corporate earnings for the next two quarters. On the other hand, the long-term impact will be a huge benefit to the country as it will move towards a cashless economy. This, in every regard, is a shining & a bold decision by the government as it will create higher tax revenue for the Government and transparency in the business community.

In 2016, two major developments in the US have impacted the Emerging Market’s negatively. Firstly, investors in the EMs including India were a little apprehensive about the Fed’s rate hikes. In the recently concluded FOMC meet, Janet Yellen has raised the key interest rates by 0.25 basis points to 0.75 %. This did not come as a surprise to the markets as a 25 bps rate hike had been already been priced in. But, at the same time Fed has also forecasted three future rate hikes in 2017. Going forward, the emerging market economies will watch the decisions of the Fed very closely.

Secondly, the win of Mr. Donald Trump in the recently concluded democratic elections came as a surprise to the Indian Economy. The president-elect’s economic policies are still a little unclear and that is an area of concern for the Emerging Economies. His tax reforms and foreign policy will be watched closely as we move into FY18.

India is undoubtedly best placed amongst the emerging markets and going forward we will reap the benefits of the structural & steady reforms that have been taken place by the Modi government. The important tax reform of GST, the good monsoons during FY 17, and the 7th Pay commission will be a major boost to the domestic consumption story. Moreover, the important move towards digitization, make the growth story stronger for the medium-long term.
At this point of time, the best strategy still remains to hold companies that have clean balance sheets, are pledge free and cash positive. In times of increased volatility, the market becomes a buying opportunity for such high potential undervalued stocks.

We are recommending our best new year stock picks 2017

New Year Stock Picks Recommendation – 2017
Company Recommendation CMP Target % Upside Time Horizon
Kotak Mahindra Bank Accumulate ( Rs 717-680) 717 895 25 9-12 Months
Bharat Electronics Ltd Accumulate ( Rs 1376-1360) 1376 1600 16 9-12 Months
NBCC Buy 226 270 19 9-12 Months
Jain Irrigation Systems Ltd Buy 84 105 25 9-12 Months
Ador Welding Ltd Buy 290 340 17 9-12 Months

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