Invest in these five pathaka stocks for Diwali Muhurat trading

Muhurat trading on the auspicious Diwali is believed to bring in profits as it coincides with prayers to Laxmi, the goddess of wealth. A lot of traders are of the opinion that trading for the hour will bring them good luck.

Business Insider India has curated a list of stocks that show potential in the long-term to buy for the muhurat.


Reliance Industries

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In the last few years, RIL has ventured successfully into new businesses like retail and telecom. Moreover, the company itself claims that it plans to spin off these businesses into separate entities. And, the buzz of a Jio IPO is gaining steam which could land shareholders with a windfall. Its plan to turn cash positive will also provide it with a valuation upside. “We believe that the Aramco deal and end of capex cycle will make the company FCF positive. The recent corporate tax rate cut will also have positive bearing. We have valued the stock at a consensus with potential upside,” says Karvy Investment Strategy report.

Hindustan Unilever

One of India’s largest FMCG companies HUL is well placed to ride the slowdown in the market. In spite of slashing prices and pressure to advertise more, Karvy brokers believes that it has the pricing power due to its premiumization strategy. Going ahead, it can give investors a 16% upside and its performance has been consistent. In the last ten years, the company has been expanding its margins by offering premium products that allow them the power of pricing. In the next one year, the company is expected to expand its margins from the current 23% to a healthy 25% by FY21.

Larsen & Toubro

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As the domestic business landed a slowdown, India’s largest infrastructure player Larsen & Toubro quickly diversified its portfolio. This strategy has worked for it as its order flow at the end of June stood at a robust ₹2,940 billion. The order flow momentum grew by around 11% year on year and the only risks it faces is in its execution. It also has a five year plan Lakshya to double its sales to ₹2 trillion by FY21.

“L&T’s diversified exposure to various sectors/ geographies coupled with its excellent execution capabilities and its balance sheet strength has resulted in strong order book build up. The consensus values the company at 22 times for a target price of ₹1,900,” said Karvy.

HDFC Bank

HDFC Bank is one of the few banks which showed shown resilience as crisis expands in the sector. Its consistent performance makes it a relative outperformer in the sector. Added to that, the stock is currently trading at around 4% of its expected value for the next fiscal. Its spreads or basically margins will see no volatility in the coming months as it holds power to price in the wholesale lending market.
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“Despite the NBFC industry facing challenges, we expect the relative outperformance of HDFC will help it to sustain premium valuations. We value HDFC at consensus of 4.3 times,” said Karvy.

Zee Entertainment

Even as the Essel group is facing liquidity crisis, the core TV business of the company is performing well. Added to that, its digital business is also growing fast with a strong use base of 76.4 million. Its subscription revenue also grew by over 5% till last year. It is also launching 72 more original digital shows which will garner more eyeballs, putting the company in the high growth sphere. Karvy is confident that it will maintain 30% profit margin in the next two years.

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