Prabhudas Lilladher released model portfolio, said in the report, market decline will stop by March
The ongoing decline in the stock market is expected to stop by the end of this month. Stability may return to the market by the end of the fourth quarter of the current financial year, January to March. This is the statement of PL Capital of financial company Prabhudas Lilladher.
FPI will return to India!
PL Capital has released its latest India Strategy Report. This report says that the market may continue to be volatile in the near term, but stability may return to the market by the end of the fourth quarter of FY 2024-25. According to the report, foreign portfolio investment may return to India due to the jump in capital expenditure. With the reduction in income tax rates, the revival of consumer demand will increase the confidence of foreign investors in the Indian market. Due to this, Prabhudas Lilladher has given a target of 25,689 Nifty in the next 12 months.
Improvement in demand-consumption
PL Capital has said in its report that domestic demand will see a recovery. The major reason for this is the decline in food inflation, which has come down from 10.9 percent in October 2024 to 6 percent now. RBI has cut the repo rate by 25 basis points, which will increase the availability of cash in the market in the next 3-6 months due to OMO. In the budget, the income tax rate for taxpayers has been reduced and Rs 1 lakh crore has been handed over to them, which will increase consumption. The economy will benefit from religious tourism. Also, there has been a 17 percent jump in the capital expenditure allocation of the government, which also includes allocation to PSUs and states.
PL Capital’s model portfolio
In such a situation, PL Capital has released its model portfolio for investors. PL Capital is overweight on consumer-related stocks due to the expectation of a boom in demand due to reduction in tax rates, reduction in inflation, reduction in interest rates. Also, it has increased its weight on bank and healthcare related stocks. PL Capital has included Cipla and Astral Poly in its model portfolio. It is also bullish on Maruti Suzuki, ICICI Bank, Kotak Mahindra Bank, ABB, Bharat Electronics, Interglobe Aviation i.e. Indigo, ITC and Bharti Airtel. PL Capital has reduced its weight in L&T, Titan, HUL, Reliance Industries, HCL Tech, and HDFC AMC. PL Capital also likes the stock of Chalet Hotels Ingersoll Rand and Keynes Tech.
Foreign investors are withdrawing investments due to these reasons
PL Capital has blamed global uncertainty and weak rupee for the selling by foreign investors in the report. Since October 2024, foreign investors have withdrawn $20.2 billion from Indian equity market and bonds, which is the highest in recent years. India has seen an outflow of $8.2 billion. PL Capital has calculated the hurdle rate for FII investments in India and estimated that the cutoff rate has risen to 10.5% due to the 4% weakening of the rupee against the dollar, capital gains tax and the 10-year US Treasury rate being at 4.5%.
