At a time when equity markets are struggling with fears of global slowdown and sovereign debt crisis in the advanced economies, it does make sense to invest money in strong fundamental blue-chip stocks which can bear the brunt of slowdown by their contribution to the Indian economy.
You can either pick from the list of stocks whose businesses are highly domestic driven or spread across various verticals providing scope for low-risk diversified business model.
Here are 5 strong large-cap investment ideas for long-term investors:
Reliance Industries (CMP 800): This Mukesh Ambani-run Oil and Gas stock is one of the top contenders for the investors. During last few months, RIL has largely under-performed the markets on the back of concerns over lower E&P volumes, reserves downgrade and fears of regulatory action.
However, markets seem to have over-reacted on the negative concerns. The stock is likely to provide smart returns to investors from current levels. Moreover, the oil giant has also sold a 30% stake to British oil major BP in 21 oil and gas blocks, that will benefit RIL from BP’s expertise in deep water exploration.
BHEL (CMP 1650): This state-run power equipment maker has under-performed the markets on the back of competition from Chinese equipment manufacturers and delay in power projects marred by fuel-linkage issues.
However, the stock is quoting at a low 13 times and boasts of a robust order book position in excess of Rs.1.5 lakh crore. Thus, BHEL is likely to show good revenue visibility.
Bharti Airtel (CMP 375): Bharti operates in the emerging markets of India and Africa, as its major source of business revenue. The company had recently acquired the African operations of Zain Telecom for $9 billion.
Recently, the share price of Bharti Airtel has surged on the back of increase in pre-paid tariffs of its ‘Advantage’ and ‘Freedom’ pack for calls and SMSes. The general belief in the sector has been that the tariff depression regime has bottomed-out and the telecom companies are likely to see price-based recovery in their networks.
NTPC (CMP 165): India’s largest power generating company that is defended by clarity on the cash-flows given that its tariffs are based on its costs and regulated in nature.
The state-run power generation company boasts of low leverage and can plan for aggressive capacity addition in future. The company faces no concerns over coal linkages for its power projects, like other ailing power companies. The company quotes at reasonable price at current levels.
SBI (CMP 1900): State Bank has corrected big time over last few months on concerns of higher NPA and prevailing interest rate scenario. However, the stock price has slumped to lucrative valuations and long-term investors can start accumulating the stock at every major dip.
Disclaimer: The above content/report is only for the educational purpose of the readers. It does not qualify as any advice or recommendation to Buy/Sell securities. The author and the blog are not responsible for the reader’s decisions based on the above report.