Brokerage JM Financial has cherry-picked 29 stocks from across the market cap that have fallen more than 15% amid the ongoing correction. The benchmark equity index BSE Sensex has declined 10% to 77,339.01 on November 18, 2024 from its all-time high levels of 85,978.25, scaled on September 27, 2024.
In the large cap space, the brokerage identified as many as 14 stocks with an upside of somewhere between 16%-39%. The list includes stocks such as Reliance Industries, ONGC, Cholamandalam Investment, Samvardhana Motherson, Shriram Transport, Havells India, DLF, Maruti Suzuki, Polycab, Jindal Steel & Power, Bank of Baroda, Hindalco, Bharat Electronics and Axis Bank.
According to JM Financial, the sell-off in the country started as a “Sell India, Buy China” trade, after the Chinese government announced stimulus measures for the economy in September 2024.
“FIIs preferred moving to China (trading at less than half of India’s valuations. India’s 1-year forward P/E through Jul ’24 to Sep ’24 was more than 1 standard deviation above mean). Consequently, China saw FII inflows of $96 billion in Sep’24,” JM Financial said in a report. FIIs have offloaded shares worth Rs 1.16 lakh crore in India since October 2024.
The broader indices, BSE Midcap and BSE Smallcap, also retreated around 10% each from their respective all-time high levels scaled in September.
“We expect a pick-up in government capex and rural demand in the second half of FY25. Further, with continued SIP flows and hopefully a slowdown in FII outflows in the near future, it might not be a bad time to start analysing JM Financial’s preferred list of 14 large, 10 mid and 15 small cap stocks,” the brokerage said.
In the midcap space, JM Financial recommended stocks such as Suzlon Energy, Supreme Industries, Oil India, BHEL, Global Health, Gujarat Gas, KEI, Metro Brands, Deepak Nitrite and Marico, among others. In the small cap space, it sees 72.9% upside in Zee. JM Financial is also positive on HG Infra Engineering, Ahluwalia Contracts, PCBL, Cyient DLM, Star Health and Allied Insurance, Gokaldas Exports, Lemon Tree, SAMHI Hotels, PNB Housing Finance, CMS Info Systems, Balrampur Chini, Bikaji Foods, Techno Electric, and Aadhar Housing Finance with an upside of somewhere between 16% and 60%.
“We believe this is the time to re-evaluate investment opportunities in India as valuations correct and analyst estimates become more realistic, as India is still the best long-term structural growth story,” JM Financial said.