Global factors-led systematic risks turning domestic growth cycle stocks favourable: ICICI Securities

The recent surge in US bond yields and a correction in crude oil prices due to concerns of a slowdown in global growth has led to a rise in systematic risk for Indian equities, according to ICICI Securities.

Given that this could impact Indian equities, the brokerage is in favour of sectors exposed to the domestic investment cycle and discretionary consumption.

The recent manufacturing PMI trajectory for India indicates a robust demand environment, while input cost pressures have started easing with the meltdown in commodity prices.

The manufacturing sector’s share in the Indian economy has reached the pre-Covid level of 18% of gross value added in 2021-22 (April-March), and ICICI Securities believes it is poised to hit an all-time high in the medium term.

Further, housing sales are witnessing a cyclical recovery, while discretionary demand for automobiles, leisure, entertainment, retail and travel are looking quite robust.

The brokerage’s top picks from an investment theme perspective include Larsen & Toubro, NTPC, Coal India, UltraTech Cement, Ashok Leyland, Tata Communications, Century Plyboards, Indian Oil Corporation, and Phoenix Mills, among others.

Tata Motors, Maruti Suzuki India, TVS Motor Co, Dabur India, Sapphire Foods, and Metro Brands are some of the consumption themes that ICICI Securities is betting on.

With the improving credit growth, Stata Bank of India, IndusInd Bank, SBI Life Insurance co, SBI Cards and Angel One are some of the stocks the brokerage likes in the financial space.