Market Makes A Smart Comeback In November; Midcaps, Smallcaps Outperform Largecaps: Motilal Oswal

Motilal Oswal Report

Equity markets were justifiably anxious about the outcome of state polls and what it portends for the 2024 general elections. With the outcome overwhelmingly in favor of the incumbent BJP, the confidence of the market in the current dispensation and political continuity post 2024 Lok Sabha elections will get a boost.

This augurs well for macro and policy momentum for India, which, at the moment, is seeing the highest growth among major economies (both GDP as well as corporate earnings).

Nifty is trading at a 12-month forward price/earning ratio of 18.4 times, which is at a 9% discount versus its long-period average.

We largely maintain our sectoral allocations and weights, relying on the sectors that have shown growth potential to drive our stock selection framework.

We remain overweight on financials, consumption, industrials, automobiles, and healthcare; while we maintain our underweight stance on metals, energy, IT and utilities, and Neutral outlook on telecom in our model portfolio.

Top ideas: Largecaps – ICICI Bank, ITC, Bajaj Finance, Larsen and Toubro, HCLTech, M&M, Titan, Avenue Supermarts, Ultratech Cement, ONGC, and Zomato.

Midcaps and Smallcaps – Indian Hotels, Angel One, Lemon Tree Hotel, Ashok Leyland, Godrej Properties, Sunteck Realty, Metro Brands, Global Health, PNB Housing, and Craftsman Automation.

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