Introduction
Diwali, the festival of lights, is a time of renewal, prosperity, and joy for many Indians. It's also an opportune time for investors to participate in the special trading session known as "Diwali Muhurat Trading." In this blog, we will delve into how Muhurat Trading works, the criteria for picking stocks, and provide a list of promising stock picks for Diwali 2023.
To make the most of Diwali Muhurat Trading in 2023, here are some essential tips on how you can select the best stocks:
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Fundamental Analysis: Seek out companies with solid financial standing. Look for firms with a track record of consistent growth and a competitive advantage within their respective sectors. Strong fundamentals are the bedrock of solid growth.
Technical Analysis: Utilize technical analysis tools to identify potential entry and exit points. This involves studying price charts, moving averages, and key technical indicators. Technical analysis can help you to make effective trade decisions.
Market News: Stay updated with the most promising sectors for the upcoming year. Keep an eye on current industry trends and market dynamics to shortlist stocks for Muhurat Trading. Investments in trending sectors are likely to outperform in the market.
Expert Opinions: Insights and research from financial professionals and reputable sources can be relied upon. Expert opinions and analyses can provide valuable insights into market conditions and help pick the right stock.
Top Stocks for Diwali Muhurat Trading 2023
Stocks in sectors such as Finance, Consumer Durables, Technology, and Hospitality have historically illuminated the Diwali season for investors. Given the current market dynamics, our team of stock market experts has thoughtfully curated a portfolio of stocks that you might consider adding to your holdings this festive season. This portfolio has been meticulously assembled, taking into account significant upcoming events, including state-level elections scheduled for Nov-Dec '23 and the General Election in May 2024. It also considers a range of fundamental variables, including interest rates, bond yields, inflation, geopolitical factors, and broader economic aspects. Let's explore this expertly tailored portfolio and understand why it's an appealing choice for your Diwali investments.
1) State Bank of India Ltd (SBIN)
India's largest commercial bank and one of the most profitable companies has consistently been the preference of astute investors. With a strengthening balance sheet that reflects exponential growth prospects and a healthy Provisional Coverage Ratio (PCR), the State Bank of India stands out when building a portfolio for future wealth creation. Motilal Oswal's experts have noted the bank's performance in terms of operating profit and its strong liability franchise, which commands a 12% market share in Tier 1 cities in India, making it a firecracking stock to have in your portfolio.
2) Titan (TITAN)
A beloved stock of Rakesh Jhunjhunwala, the Tata Group's Titan, a leading watch-maker and jewellery brand, controls over 7% of the market. With outstanding performance in its category, the company, which transitioned from watch-making to jewellery, is steadily expanding into other consumer-centric industries such as fragrances, fashion accessories, and Indian dress-wear. As predicted by MO experts, this expansion is expected to show a record double-digit growth, making Titan a must-have stock in your Diwali portfolio.
3) Mahindra & Mahindra (M&M)
This Indian-based multinational automotive manufacturing company has established a significant presence in rural India, capturing approximately 65% of the market in terms of volume. The growing demand for SUVs has further solidified the brand's position as a top choice among retail consumers. Experts at Motilal Oswal anticipate the company delivering a Compound Annual Growth Rate (CAGR) of 16% in Passenger UVs volume from FY23 to FY25, making it an attractive stock to consider.
4) CIPLA (CIPLA)
This Indian-based pharmaceutical company has consistently delivered strong performance over the years. The company is now poised for robust expansion in the US generics market through the production of complex product lines such as inhalers, peptides, injectables, and more. With its future growth prospects and current market strength, CIPLA is projected to achieve an earnings CAGR of 19% for FY23-25E, making it a powerful stock to hold your portfolio in perfect health.
5) Indian Hotels (IHCL)
This Indian hotel company shows promising growth potential, especially with its RevPAR growth, providing good visibility for the upcoming festival season. The company's management aims to double the RevPAR for FY24, aligning with the growing retail demand, a rebound in foreign tourist arrivals, and favorable vacation weather conditions. As a result, this stock is a top pick for your Diwali portfolio.
6) Dalmia Bharat (DALMIABHA)
A significant increase in cement prices, particularly in the East topped with increased demand has allowed the cement-manufacturer to benefit. Experts at Motilal Oswal are expecting an increase of approximately 11% in the volume CAGR over FY 23-36, which can be achieved with the reduction in Operating efficacy and cooling fuel prices.
7) Kaynes Technology India (KAYNES)
As one of the prominent players in end-to-end and IoT-enabled integrated electronics manufacturing in India, Kaynes Technology boasts a strong order book growth of about a 96% CAGR from FY20 to FY23, with a higher share of Box Build (approximately 40% for 1HFY24) and PCBA (54%). Experts at Motilal Oswal estimate up to 41% CAGR growth in revenue, with an adjusted Profit After Tax (PAT) at 56% for the period from FY23 to FY26. These estimations are driven by a healthy order book and an improved margin profile, characterized by an increasing mix of high-value orders.
8) Raymond (RAYMOND)
In the last 2-3 years, Raymond has bolstered its leadership team and restructured its group which has proved beneficial for brand promotion and business. The demerger and promoter's capital infusion have significantly strengthened the company's balance sheet. With a product portfolio consisting of well-established brands - including Raymond, Park Avenue, ColorPlus, and Ethnix, the company intends to expand these through a capital-efficient franchisee model, thus displaying a shining prospect for the business.
9) Spandana Sphoorty Financial (SPANDANA)
The NBFC has shifted its focus from consolidation to the growth phase, aiming for customer acquisition-driven expansion, with an impressive addition of 3,50,000 borrowers which is a 180% YoY increase in 2QFY24. With enhanced processes in place, the company is well-prepared to harness the substantial opportunity within the MFI sector. Projections indicate a 34% CAGR in Assets Under Management (AUM) from FY23 to FY26, with a Return on Assets (RoA) and Return on Equity (RoE) reaching 4.4% and 17% in FY26, respectively, making this a hot stock to pick for Diwali.
10) Restaurant Brand Asia (RBA)
Over the past few years, Restaurant Brand Asia has made significant improvements to its products via introducing new and focused categories which provide value to attract more customers. As a result, experts at Motilal Oswal anticipate a positive turnaround in its business within the next 2-3 years. Additionally, with an aggressive approach to adding new stores (projected at a 17% CAGR from FY23 to FY26), the brand is positioned favorably to achieve substantial growth, with an expected revenue and EBITDA Compound Annual Growth Rate (CAGR) of 26% and 45%, respectively, for its India business from FY23 to FY26E.
Conclusion
Diwali Muhurat Trading is not a mere financial activity but a cultural and financial ritual embodying themes of hope, prosperity, and fresh starts. This occasion provides investors with a unique chance to positively commence the new Hindu year by investing in carefully chosen Diwali stock selections.
Effective stock selection is significantly dependent on market and economic dynamics. Therefore, investors should stay well-informed about economic trends, legislative shifts, and external influences that could impact the Indian markets. This knowledge will enable them to make the most of this auspicious event, setting the stage for a prosperous year of investments.
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