Despite a weak start in 2013, the Sensex is likely to gain 12 per cent over the rest of the year, says a Citigroup report. The current weakness is a good time to have a bottom up approach in 20 stocks that can give around 20 per cent, it says.
According to the report there are challenges – on growth, corporate confidence /investment momentum, current account deficit, monetary policy flexibility and near-term earnings in 2013.
However, there is greater corporate rationality, some BS de-risking, government policy action, and some pretty decent, well growing and reasonably valued businesses.
“It is tough out there, but don’t shut your eyes – open them to 20 stocks that could give you 20 percent,” the report said.
It is of the view that investors should look at several small themes for stock picking rather than one grand one.
“These include a) falling interest rates – but moderate falls from here; b) continuing government policy/pricing action – and a little more on the execution side; c) maintaining a currency hedge – it’s a vulnerability; d) moderating consumer demand; e) positioning for a recovery – albeit one that will be gradual, U rather than V-shaped; and f) an improving global outlook,” the report says.
A major portion of the 20 stocks come from the largecap space. But after the sharp correction in the midcap space in 2013, it has picked up a few stocks that could generate decent returns.
Source : The Economic Times