Outlook for 2015 by Religare Capital research
“Indian equities have seen a strong liquidity driven rally in the year 2014. During the year BSE Sensex jumped 29% or more than 6000 points and CNX Nifty jumped 31% or almost 2000 points. FIIs inflow was very strong and they have pumped approx. Rs 97,000 crore in Indian equities.
Market also witnessed a sharp decline in crude oil prices to levels below $ 60 per barrel, due to supply side concerns. Further, the decision by OPEC nations to not cut oil production means that crude oil prices will remain under pressure for the next couple of quarters. Decline in the price of crude oil has been a big positive for the country.
The important factors that may affect the stock market in 2015 would be global and domestic market environment, inflation, interest rate scenario, fiscal/trade scenario and reform actions from the Modi government which is taking strong steps for revival of the economy. An environment of positive growth, declining inflation and possible rate cut by RBI in early 2105 are the main catalyst for Indian equities.
On divestment front, we expect more announcements on the first quarter of 2015. During that period, some volatility will be observed in the markets due to oversupply. However, we believe that the equity market’s momentum is likely to continue during next year also. Investors can use the volatility to pick strong fundamental stocks for long term.
On global front, US Fed decision for its interest rate increase will also play a major role”, says Religare Capital research report.
The domestic business has been a key growth driver for IPCA as the company changed focus from the low margin anti-malarial segment to focus on higher margin chronic/lifestyle diseases. We expect that its US FDA issue with Ratlam facility will be sorted in the next financial year. Therefore, investors can consider the stock with long term investment perspective.
Mahindra and Mahindra
The key value driver of M&M will be the new launches where the company is expected to launch 3 products in CY15 (2 SUVs and 1 CV) and an XUV 500 hybrid. Its farm equipment sector is strengthening footprint with a focus on the key markets of USA and China, amongst other regions. We expect an increased demand of utility vehicle and tractor sales with new launches. The HCV industry has also shown a sign of revival and consequently, we expect that M&M HCV volumes will improve along with the improvement in domestic economy.
PI’s capacity maintains an optimal utilization due to its strong order book. Also the company is a preferred supplier to the global agrochemicals industry for newly discovered products. The Company commercialized three new molecules for custom synthesis exports, which are expected to gain traction over the next few years. The company also possesses an immense presence in custom synthesis field and its expertise in the complex chemistry puts it in an advantageous position for adding new molecules to its pipeline.
The sales of Commercial vehicle are linked to economic growth of the country and auto industry is likely to witness improved sentiments in CY15. The company is expected to continue focus on writing profitable business and maintaining its asset quality, however, the prospects for growth will hinge largely on the policy measures of the new government and speedy implementation of stalled infrastructure projects.
The company expects multiple opportunity spaces for growth and gaining market share, while the industry landscape is still undergoing change. In H2FY15, it expects good momentum in large deals and better performance. In digital field, it sees immense opportunity and will establish a digital capability which offers a broad based human-centric design proposition, with an architecture directly focused on addressing core customer needs.
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