Top Stock Picks 2024: From Coal India To SBI - Axis Securities Recommends 16 Stocks To Buy In June

Tuesday's opening bell on the Indian stock market saw strong selling pressure even though Gift Nifty surged to a new all-time high. The India VIX fell 15% on Monday as exit polls strengthened market confidence, but it is now up around 39-44%, trading in a range of 29-30. The results of the Lok Sabha Election on June 4th, which reflected the fierce political fight, caused notable market reactions in the midst of a volatile market. Axis Securities' top picks for the month of June 2024 are 16 stocks that it believes are worth buying in the midst of a tumultuous market.

"The Indian market is likely to give a thumbs up with benchmark indices likely to head towards newer highs. India VIX, which went up by almost 91% in the last one month from the level of 13 to 24, could see some cool-off after these spectacular results. If the Loksabha results on 4th June materialize as per the Exit Poll direction, our country is likely to enter a "Golden Phase" of political stability and policy continuity. The Indian economy is in a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy. With this expectation of political stability and policy continuity, the prospects of the Indian economy appear notably brighter and more promising in the upcoming years. We further believe that policy continuity is a crucial element for the continuation of the current macro cycle," Axis Securities said in a note.

"The focus of Modi 3.0 will likely continue on developing the country's public infrastructure such as roads, water, metro, railways, defence, digital infrastructure, and green technologies. Its overall focus would also be on creating more jobs and achieving investment-driven growth. Furthermore, the private Capex, which has been sluggish for the last several years, is expected to receive a much-needed push in the upcoming years. While the macro set-up is positive, the fundamentals for Indian corporates have also improved. Profitability across the board has improved significantly, Cumulative and rolling net profit of the NSE 500 universe for the last 4 quarters (till Q4FY24) has touched an all-time high level of Rs 13.5 Lc Cr with loss-making sectors turning positive and significantly contributing to the net profitability. Moreover, ROE for the broader market is improving after a muted performance for several years. Asset quality of the banking sector - both private and PSU, has improved significantly over the last couple of years. Thus, against this context, the Indian equity market is likely to trade at a premium valuation as compared to the other emerging markets," the brokerage further added.

Market Outlook

"We believe the market fundamentals will continue to be driven by "narrative" in the near term. The market will continue to find direction based on 1) "Feel good" factor on policy continuity, 2) Pre-Budget expectations, 3) Progress of Monsoon, 4) Development on the CAPEX agenda, 5) Fiscal consolidation path, and 6) Expectation of rural recovery in the second half. In light of the above developments in view, we believe style and sector rotation will play a critical role in the alpha generation moving ahead. Moreover, with a strong catch-up by Midcaps and Smallcaps in the last couple of months, we still believe the margin of safety in terms of valuations for these segments at current levels has reduced as compared to that available in Largecaps," the research analysts of Axis Securities commented.

"Keeping this in view, the broader market may see some time correction in certain pockets in the near term and flows will likely shift to Largecaps. Based on this, we believe Nifty 50 could see a new high in the near term. In any case, the long-term story of the broader market continues to remain attractive and in this context, two themes - 'Growth at a Reasonable Price' and 'Quality' look attractive at the current juncture. Hence, we recommend investors to remain invested in the market and maintain good liquidity (10%) to use any dips in a phased manner and build a position in high-quality companies (where the earnings visibility is quite high) with an investment horizon of 12-18 months. We foresee FY25/26 NIFTY Earnings at 1094/1234 after Q4FY24 with a growth rate of 10%/13% respectively," they stated.

Stocks To Buy In June

"Keeping these latest developments in view, we have made some changes to our Top Picks recommendations. This includes booking Profit in PNC Infra and JTL Industries adding Cholamandalam Invest and Finance and J Kumar Infra to the recommendations. Our modifications reflect the changing market style and shift towards the 'Growth at a Reasonable Price 'theme," said Axis Securities.

The brokerage has recommended ICICI Bank, Coal India, Nestle India, State Bank of India, Lupin Ltd, AurobindoPharma, Federal Bank, Varun Beverages, TVS Motors, BhartiAirtel, J Kumar Infra, CIE Automotive India, Bank of Baroda, Westlife Food world, CreditAccess Grameen and Cholamandalam Invest and Finance to buy in the month of June.

Key Monitorables In 2024

"Multiple events are lined up in 2024 and the market will continue to closely monitor the developments around them. These key events are 1) The ongoing General Election 2024 results on 4th Jun'24; 2) Expectation of the FED rate cut, 3) Full-year budget around Jul'24 after the formation of new government; 4) Expectations of interest rates cut by the RBI in sync with global rate cuts, and 5) The US Election in Nov'24. The above-mentioned events are expected to keep the Indian equity market volatile and it could respond in either direction based on the developments. In any case, we continue to believe in the long-term growth story of the Indian equity market. With increasing Capex enabling banks to improve credit growth, we believe it is well-supported by the favourable structure emerging. With current valuations offering a limited scope for further expansion, an increase in corporate earnings will be the primary driver of the market returns moving forward. Hence, bottom-up stock picking with a focus on 'growth at a reasonable price' and Quality stories would be keys to generating satisfactory returns in the next one year," Axis Securities said.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.