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vendredi 25 juillet 2014

Why top 5 Nifty losers of FY14 are good buys; high-beta stocks a bet

AppId is over the quota
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On the 50-share Nifty, there were more gainers than losers in the last fiscal year, but stocks which did slip in the red should be able to make up for losses now, say analysts.

Top five losers in Nifty for the year FY14 were DLF (down 25 per cent), JSPL (16 per cent), IDFC (15 per cent), NTPC (14.7 per cent) and Tata Power (9 per cent).

India is one of the top performers right now among the emerging markets as foreign institutional investors are hopeful of economic recovery in FY15 on improved macros, and they are betting big on beaten-down cyclicals, banks and high-beta stocks.

FII flows picked up sharply in March 14 -aggregating $3.6 billion - the highest monthly inflow in 10 months, Deutsche Bank said in a report. FII flows into debt also remained strong at US$1.1 billion, albeit lower than January-February 2014, and could ease further with RBI banning FII investment into sub-one year maturity government debt.

"The markets are looking up, the FII flows have been very strong. The broad expectation is that the economy will bottom out in FY15 and start picking up. The corporate earnings growth momentum should also pick up after being in a declining mode for the last four or five years," said Prabodh Agrawal, Head of Research, IIFL Institutional Equities.

"So, definitely fundamentals are expected to improve and the fact that the markets have been trading sideways for a number of years, valuations are looking attractive," he added.

Agrawal is of the view that many sectors and stocks have been beaten down significantly and valuations are very attractive and therefore there are enough reasons why the market should start looking up and go up further.

Indian market was among the top performing markets globally last month alone with Sensex rising by 6 per cent in INR and 9.4 per cent in dollar terms - second only to Turkey - as the declining likelihood of a fractured mandate, improving macro and a status-quo in RBI policy helped investor sentiments.

Deutsche Bank is of the view that and we could receive a further boost if the election mandate is decisive. Unsurprisingly, among key EMs, India has been the biggest recipient of YTD FII flows ($4 billion), followed by Taiwan ($3.6 billion) and Indonesia ($2.4 billion).

Deutsche Bank maintains its constructive outlook on Indian market and has reiterated December 2014 Sensex target of 24,000.

Last month, global investment bank, Nomura highlighted the fact that investors should remain neutral on the market closer to elections to hedge against potential post-election volatility. They have pegged their December-end 2014F Sensex target at 24,700.

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