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InCred adds Deepak Fertilisers to high-conviction stock picks, removes THESE two stocks; here’s why | Stock Market News
Source: Live Mint
Recent high-frequency economic data highlights the persistent macroeconomic challenges in India, including subdued GST collection growth, fluctuating automobile sales, and currency volatility, according to InCred. These factors have contributed to cautious market sentiment, with the Nifty 50 index likely to remain in a consolidation phase due to prolonged risks to GDP and EPS growth.
Macroeconomic Overview
InCred noted that for FY25, Bloomberg’s consensus estimates for real GDP growth continued to decline, citing underwhelming capital expenditure, a peaking trade deficit, and a decelerating GST collection trend. GST collections rose by just 7.3 per cent year-on-year in December 2024 and 9.1 per cent during the first nine months of FY25.
Looking ahead to FY26, InCred highlighted emerging global uncertainties, including slower trade growth and the strengthening US dollar, which has pressured emerging market currencies. The Indian rupee depreciated by 0.7 per cent in December 2024 and experienced a sharper decline in the final days of the month.
InCred expects the US dollar to strengthen further, driven by robust economic growth in the US and the impending presidency of Donald Trump. This could accelerate the depreciation of the Indian rupee in the March 2025 quarter, beyond the 1.4 per cent depreciation recorded during the first nine months of FY25.
Despite these challenges, InCred remains optimistic about the IT and pharmaceutical sectors, which are well-positioned to benefit from a stronger US dollar. However, much hinges on the Union Budget in February 2025, which InCred hopes will address these macroeconomic challenges through measures like income-tax cuts to boost consumption and increased government capital expenditure.
High-Conviction Stock Ideas
InCred provided an updated view of its high-conviction stock ideas, introducing Deepak Fertilisers (ADD) while removing Exide Industries (REDUCE) and BCL Industries (ADD) from its list.
Addition: Deepak Fertilisers and Petrochemicals Corporation (ADD) has been added to the list, with InCred citing cost benefits from ammonia expansion and a favourable gas contract as key drivers of profitability.
Removal: Exide Industries was removed after the stock correction aligned with InCred’s target price expectations. BCL Industries was also dropped following a review of its plans to enter the biogas segment.
Recent Performance Since September 2022
Outperformers to Nifty: Skipper (ADD), Aditya Birla Sun Life AMC (ADD), and Bharat Forge (ADD).
Underperformers to Nifty: Hero MotoCorp (ADD), Exide Industries (REDUCE), and Pidilite Industries (ADD).
Top Absolute Returns in Recent Months: Lupin (ADD) and Bajaj Finance (ADD).
Technical Trend-Favourable Picks
InCred identified Hero MotoCorp, Lupin, Maruti Suzuki, and Bajaj Finance as stocks with favourable technical trends, all rated as ADD.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
