Recent interest rate cuts by the Federal Reserve have given a boost to global markets, with the MSCI World Market index rising over 2.5% from September 18 to 26. The Indian market is also hitting new highs, supported by positive signals that inflation is under control and the U.S. economy is stable. Additionally, India’s strong economic growth and favorable conditions, like a reduced fiscal deficit and manageable current account deficit, are driving this market rally.
The increase in liquidity from the Fed’s rate cut has led to a surge in Foreign Portfolio Investor (FPI) inflows, reaching ₹48,822 crore in September—the highest this financial year. Overall, FPI inflows for 2024-2025 have hit ₹80,815 crore. Experts believe that FPI buying interest could rise, especially in the banking sector.
According to V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, banking stocks look attractive now due to a recent reduction in the credit-deposit gap. While banking stocks are fairly valued in this overheated market, they may continue to rise, boosting overall market indices. Despite high valuations, foreign investors still view India positively, and some are exploring sectors beyond banking and financial services.
Analysts suggest that sectors such as real estate, infrastructure, automotive, and telecom will benefit from the current rate-cut cycle. However, weakness in the dollar index may negatively affect companies in the IT and pharmaceutical sectors.
Amit Golia, Group CEO of MarketsMojo, cautions that the advantages of the recent rate cuts have likely been factored into current high valuations, making it less likely for rate-sensitive stocks to yield substantial returns. Instead, he advises retail investors to focus on promising companies in the right sectors.
To find good investment opportunities, experts looked for companies that have improved their earnings quality score—an indicator of a company’s reliable earnings—by more than 50% year-on-year.
Here are five stocks that meet this criterion and offer strong potential:
APL Apollo Tubes: This structural steel tube manufacturer saw muted performance recently but is expected to rebound as construction activity picks up. New plants in Siliguri, Gorakhpur, and Ahmedabad will enhance capacity and market share.
Somany Ceramics: A tiles and decor solutions provider, Somany faced challenges recently due to weather and elections. However, improved housing demand and exports are expected to boost performance in the coming quarters, especially with a stronger product mix.
Honasa Consumer: Known for its personal care brand Mamaearth, this company reported strong revenue growth thanks to expanded distribution and market share gains. It aims for continuous growth with an emphasis on innovation and consumer engagement.
ACC: A key player in the cement industry, ACC’s performance was impacted by falling prices, but it expects growth from increased government infrastructure spending and rising housing demand. Strategic acquisitions and a shift towards green energy will also support its growth.
Maruti Suzuki: This automobile manufacturer saw a 10% revenue increase due to better sales and a higher mix of utility vehicles. The company is expanding production capacity and diversifying into electric and hybrid vehicles, positioning itself for steady growth.
Investors should keep an eye on these stocks, as they show strong fundamentals and potential for significant returns.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
