HCL Tech, Axia Bank, Suzlon, L&T, Maruti Nomura's preferred bets

NEW DELHI: Brokerage Nomura says while global growth will be on a generally upward trending path over the coming quarters, which will also get reflected in corporate earnings and lead equity prices higher, the ongoing policy normalisation in the US will likely cause recurring corrections in those Asian markets, which have weaker external fundamentals.

The brokerage said it would be prudent to position in markets and sectors that benefit from exposure to developed market growth or steepening yield curves over the next six- to 12-month horizon, while being more insulated from unwinding carry trades.

"With risk premia close to long-term averages, support from multiple expansion is likely to be limited," th brokerage said. "We believe a combination of further easing in some geographies and cyclically improving data in others will continue to support risk assets," it said.

The brokerage said it prefers North Asian markets over Asean, in general, and cyclical/growth-sensitive sectors like financials and discretionary over defensive sectors.

"In addition, with corporate balance sheets the one best placed to drive recovery globally, we advise Overweight positions in the Industrials and Technology sectors, which are exposed to a prospective pick-up in corporate capital expenditure," the brokerage said.

HCL Tech is Nomura's preferred exposure to ITeS space in the India portfolio, as it focuses on market share gain and better propositions in segments driving demand. "Given high exposure to the rural market, we believe auto-maker Maruti Suzuki will continue to outperform India’s passenger car industry," it said.

The brokerage prefers Indian private banks to gain exposure to a likely positive surprise in inflation (lower inflation) and as India’s investment cycle bottoms. Axis Bank is the preferred pick here.