G Chokkalingam, Founder and MD of market research firm Equinomics Research, advised investors to never compromise the fundamentals and valuations while chasing stocks. "You may try to chase the momentum in the stocks but totally don't compromise the fundamentals and valuations. Don't ignore them completely. Look at the management guidance, balance sheet quality, valuation comfort zone, leveraging and also the durability of its business model. Give at least 20 or 30 or 40 per cent weightage to this and maybe 50 or 60 per cent to momentum, if you are risk-taking. So, one can learn a great lesson from the unique stories which played out in 2024," he told Business Today on Friday.
In response to a query about whether shares of Bajaj Finance Ltd deliver promising returns in the upcoming year 2025, the market expert said, "Bajaj Finance is a great company with great management, achievements and track record. There's no doubt about that but I am not comfortable at buying Bajaj Finance at current valuations because the entire financial sector, including banks and NBFCs, is expected to go through a significant moderation in credit growth. So, I would not give this kind of valuation multiple at the current juncture. One can consider a stock like HDFC Bank, as the private lender is improving on all fronts such as CDR ratio, liquidity ratio."
HDFC Bank is making a lot of attempts to improve its credit growth and the most important trigger would be the listing of its financial subsidiary (HDB Financial Services) which could give significant resources to the bank to improve capital and business, Chokkalingam added.
"Its valuation multiple is far below Bajaj Finance. So, I prefer HDFC Bank over Bajaj Finance from the banking and financial space," he further stated.
Meanwhile, domestic benchmarks traded higher in late deals today as pharma, automobile and FMCG shares picked up pace. Broader markets (mid- and small-cap shares) were also positive.
14 out of the 19 sector gauges -- compiled by the NSE -- were trading in the green. Sub-indexes Nifty Pharma, Nifty Auto and Nifty FMCG were outperforming the NSE platform by rising as much as 1.38 per cent, 1.48 per cent and 0.44 per cent. In contrast, Nifty Metal and Nifty PSU Bank fell 0.69 per cent and 0.51 per cent, respectively.
The overall market breadth was slightly positive as 1,972 shares were advancing while 1,945 were declining on BSE.
Shares of Bajaj Finance were up 1.44 per cent at Rs 6,915 today while HDFC Bank's stock edged up 0.16 per cent to trade at Rs 1,794.65 level.