Motilal Oswal sees buying opportunity
21 Jul 2006
Mumbai: Motilal Oswal Securities' report titled India Strategy - Purged `n' ready for another dawn, says that the valuation premium of some secular growth sectors have contracted and thus this was an opportunity to buy growth at relatively lower premium. After the better-than-expected first quarter earnings by Infosys, ACC, Gujarat Ambuja and TCS, Motilal Oswal anticipates earnings upgrade on all the large caps.
Among the large caps, its top picks include HDFC, Reliance Industries, Infosys, Maruti, ITC, ICICI Bank, Bharti, Bajaj Auto, HLL, and Cipla.
The report states that the excesses specific to Indian markets have been purged, referring to the significant reduction in arbitrage positions and the meltdown in mid-caps and real estate stocks.
For
instance, the F&O positions were down by 57 per cent
to $4.5 billion from $8 billion in April 2006. In comparison,
the F&O position was $4.5 billion in June 2005, when
the Sensex was at 7,000
levels. The report has also made a strong case for stock
market investments saying that the risk-reward equation
was favourable for long-term investing.