Brokerages bet big on infra, banking scrips

Infrastructure, capital goods and agriculture-related stocks will continue their sizzling performance in 2008. Moreover, the financial services sector and selective real estate stocks are also expected to give handsome returns to investors in the new year, according to a Business Standard poll of leading brokerage houses.

"Infrastructure, agriculture-related companies, real estate and capital goods remain our favourite sectors, going forward. India needs to do a lot towards infrastructure in a short span of time. This opens up a huge opportunity for existing players," said Amitabh Chakraborty, president, equity, Religare Securities.

The Bombay Stock Exchange's Capital Goods Index climbed by 10,449.52 points, or 113.63 per cent to 19,645.23 in this calendar year as stocks such as Larsen & Toubro, Bhel, Suzlon Energy, ABB, Siemens and Punj Lloyd, which are the constituents of the index, became some of the best performers this year. 
 

TOP FAVOURITES Share price on BSE in Rs
Scrips	Dec 29,06	Dec 28,07	% Chg
L&T	1,442.95	4,150.30	187.63
Punj Lloyd	205.91	561.50	172.69
ABB	742.30	1,490.00	100.73
Siemens	1,134.45	1,889.40	66.55
Suzlon	1,304.34	1,902.35	45.85

The BSE Bankex, which tracks the banking stocks including State Bank of India, ICICI Bank, HDFC Bank and Axis Bank, shot up by nearly 60 per cent this calendar year, beating the benchmark Sensex, which also had returned over 40 per cent this year.

"Large spending on capex and infrastructure currently under way in the economy could accelerate further in 2008, leading to strong business momentum orders and revenue visibility for companies in sectors such as power generation, construction of infrastructure, industrial equipment and capital goods," said an analyst of a Morgan Stanley.

Added Lalit Thakkar, director, research, Angel Broking: "Sectors such as infrastructure, capital goods and real estate have been in the forefront of the rally during 2007."

Since its launch in July, the BSE Realty Index rose from 7,377.53 to 12,551.26. It gave an amazing return of over 70 per cent in a matter of five months as stocks such as DLF, Unitech, Indiabulls Real Estate, Phoenix, among others, shot up on the excellent future prospects from the real estate development.

"We are bullish on capital goods, construction, power and equipment, banks, telecom and engineering equipment stocks," said Amar Ambani, vice-president, research, India Infoline. "Real estate could be a mixed bag," he added.

Chandra Chincholkar, head, institutional sales, Avendus Capital, said the huge investments in power, infrastructure and real estate will generate a decent number of jobs and this should help strong order-book for corporate houses in these sectors for at least the next 2-3 years.

According to government estimates, India requires about $ 500 billion investments in the infrastructure sector in the next five years to build more roads, airports, sea ports and power plants. This will help companies operating in these sectors.

"Power is another sector that will play an important role in 2008. The ever-growing energy needs of 1,100 million people in India would imply massive investments in power generation and distribution. However, a word of caution here is that the valuations of this sector are rich and are not factoring the execution risks associated with power projects," said Anurag Tripathi, executive vice-president, equities, Almondz Global Securities.