Here's why Airtel, ICICI Bank, L&T, and Maruti Suzuki are among IIFL's top picks this new year

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Here's why Airtel, ICICI Bank, L&T, and Maruti Suzuki are among IIFL's top picks this new year
One of India's top broking house, India Infoline (IIFL), listed out its top picks for the new year 2020 based on certain assumptions about the factors that will play out and how they will impact the stocks in India.

LargecapsMidcaps
AirtelCummins
L&TGujarat Gas
Maruti SuzukiAshok Leyland
SBI LifeSudarshan Chemical
ICICI BankVarun Beverages


"Indian equity markets may remain polarized (at least through first half of 2020) wherein select high quality stocks with earnings visibility may continue to command rich valuations," a recent report said.

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These are some of the highlights from the report listing out the possible factors that will move the market

  1. Pullback in US-China trade war and a decisive political mandate in the UK to manage Brexit deal is likely to alleviate global uncertainty around the demand environment. Further, easing trade tensions will help reverse the falling global trade volumes. As a result, global growth is expected to see expansion during the year 2020.
  2. Given that 2020 is an election year for the US, Federal Reserve is likely to keep the interest rates low throughout the year. Thus, dovish monetary policy by the developed markets will keep the global liquidity at elevated levels for a considerable period of time.
  3. Emerging markets such as India, may see strong foreign inflows due to high global liquidity coupled with improved optimism around the resolution of tariff wars. Thus, with ‘risk on’, 2020 could be yet another year of having upward trending global equity markets.
  4. Key commodities might make a come back in 2020 on high global liquidity and revival in demand after US-China trade settlements.
  5. On the domestic front, India’s growth scenario may remain challenging (in the first half of 2020) due to consumption slowdown. However, the economy may see green shoots of recovery as measures taken by the RBI and the Govt. are likely to bear fruits by second half of 2020.
  6. The govt. might dare to loosen its purse string to boost consumption and revive private investments despite unavailability of fiscal space. Thus, fiscal situation is likely to remain stretched through 2020 and will force the Govt. to push through hard reforms.
  7. Despite stretched fiscal condition, Rupee may not feel significant pressure due to ebbing of external risks (easing trade war, hope of smoother Brexit and dovish view of US Fed). Moreover, benign trade deficit and healthy FDI flows will continue to aid rupee.
  8. Indian bond yields too may not see significant upside due to RBI’s strong intent to normalize the yield curve through active OMOs.
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