Samvat 2076 has begun on a positive note with the Sensex settling above 40,000 and the Nifty just a stone’s throw away from the 12,000 mark. The tax cuts seem to be finally playing out on stock market valuations. However, the key themes for Samvat 2076 will extend beyond equities and will also encompass other asset classes too. Here are the themes.
Yes, consumption will continue to be the big equity theme
Consumption has quite a few positives going in its favour. The tax cuts are likely to benefit the consumption stocks the most as a large number of them are in the high effective tax bracket. In fact, broad consumption including FMCG, private banks, financials and auto is expected to corner a major chunk of the $20 billion tax largesse that the government has given to corporate India. Also, weak oil prices are broadly positive for consumption and at 5.5% GDP growth, the top line may still take a hit but profitability should be sustained. In a difficult year, this should be the sectoral theme to focus on.
PSU theme could be the dark horse for the coming year
If you are worried that PSU banks and other CPSEs have been laggards for too long, then Samvat 2076 could be the year of the turnaround. Take the case of PSU banks. The rally in the early days of Samvat 2076 is not entirely unfounded. Most banks have seen the worst of the NPA cycle and the improvement is visible in September quarter numbers. The merger of key PSU banks combined with recapitalization will be the energy booster. Non-banking PSUs also have reasons to cheer. The government has indicated that it will be aggressive and innovative in privatizing PSUs. Most PSUs engaged in mining and oil sectors are operating below their efficiency capacity. A lot of value could be unlocked by privatization and the hints are already there in the case of BPCL. Above all, the government is embarking on monetizing the latent assets of PSUs, which could make this segment a dark horse.
Yes, consumption will continue to be the big equity theme
Consumption has quite a few positives going in its favour. The tax cuts are likely to benefit the consumption stocks the most as a large number of them are in the high effective tax bracket. In fact, broad consumption including FMCG, private banks, financials and auto is expected to corner a major chunk of the $20 billion tax largesse that the government has given to corporate India. Also, weak oil prices are broadly positive for consumption and at 5.5% GDP growth, the top line may still take a hit but profitability should be sustained. In a difficult year, this should be the sectoral theme to focus on.
PSU theme could be the dark horse for the coming year
If you are worried that PSU banks and other CPSEs have been laggards for too long, then Samvat 2076 could be the year of the turnaround. Take the case of PSU banks. The rally in the early days of Samvat 2076 is not entirely unfounded. Most banks have seen the worst of the NPA cycle and the improvement is visible in September quarter numbers. The merger of key PSU banks combined with recapitalization will be the energy booster. Non-banking PSUs also have reasons to cheer. The government has indicated that it will be aggressive and innovative in privatizing PSUs. Most PSUs engaged in mining and oil sectors are operating below their efficiency capacity. A lot of value could be unlocked by privatization and the hints are already there in the case of BPCL. Above all, the government is embarking on monetizing the latent assets of PSUs, which could make this segment a dark horse.
No comments:
Post a Comment