Top 10 Stocks To Buy In India In 2022
The stock market refers to a collection of exchanges where shares of publicly traded firms can be bought, sold, and issued. Such financial transactions are carried out on institutionalised formal exchanges (physical or electronic) or over-the-counter (OTC) markets governed by a set of rules.
Although the phrases “stock market” and “stock exchange” are frequently interchanged, the latter is a subset of the preceding. When someone buys or sells stocks in the stock market, they do it on one or more exchanges that make up the whole stock market.
Overview of the Indian stock market
BSE and NSE
India’s two largest stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), handle the stock market’s transactions. Since 1875, the BSE has been around. NSE was established in 1992 and began trading in 1994.
BSE had 5,565 listed businesses, compared to 1,920 on the competing NSE as of March 31, 2021.
The NSE has the biggest trading volume, despite the fact that the BSE is the older stock exchange. Both exchanges compete for order flow, resulting in cheaper costs, increased market efficiency, and the development of new products.
Trading Mechanism
Trading takes place on an open electronic limit order book, with orders matched by the trading computer.
The entire process is order-driven, which means market orders are automatically matched with investors’ best limit orders. As a result, both buyers and sellers keep their identities hidden.
An order-driven market has the advantage of providing transparency by displaying all buy and sell orders in the trading system.
All trading systems must be placed through brokers, many of whom provide retail customers with an online trading platform. Institutional investors can employ direct market access, which allows them to use trading terminals to make orders directly into the stock market trading system.
Settlement
In stock spot markets, a T+2 rolling settlement is used.
Trading Hours
Any trade placed on Monday will be finalised by Wednesday. All stock market trading takes place between 9:55 a.m. and 3:30 p.m., Indian Standard Time (+ 5.5 hours GMT), Monday through Friday. Shares must be delivered in dematerialised form, and each exchange has its own clearing house, which serves as a central counterparty and absorbs all settlement risk.
Market Indexes
Sensex and Nifty are two famous stock market indexes. The Sensex is the oldest market index, comprising 30 companies on the Bombay Stock Exchange. It was founded in 1986.
The Standard and Poor’s CNX Nifty is another index that includes 50 NSE-listed stocks. It was founded in 1996 and contained time-series data from July 1990 to the present.
Regulation
The Securities and Exchange Board of India, established in 1992 as an independent organisation, is responsible for the stock market’s development, regulation, and supervision. SEBI has worked hard to develop market rules compatible with the best market practices. In a breach, it has the authority to impose sanctions on market players.
Who Can Invest in India?
India first began to allow foreign investment in the 1990s. The two categories of foreign investments are foreign direct investment (FDI) and foreign portfolio investment (FPI). FDI refers to investments in which the investor is involved in the day-to-day operations and management of the company. In contrast, FPI relates to investments in shares with no control over managing and operations.
A foreign institutional investor or a sub-account of one of the registered FIIs must make portfolio investments in India. SEBI, the market regulator, has approved both registrations.
Most foreign institutional investors include mutual funds, pension funds, endowments, sovereign wealth funds, insurance companies, banks, and asset management businesses. Foreigners are now prohibited from investing directly in India’s stock market. Individuals with a net worth of at least $50 million, on the other hand, are eligible to become FII sub-accounts.
Major investments are in primary and secondary market securities like shares, debentures, and warrants of companies that are or will be listed on an Indian stock exchange.
An FII registered as a debt-only FII can put all of its money into debt securities. Other FIIs must put at least 70% of their money into the stock market. The remaining 30% can be used to finance debt. FIIs must use special non-resident rupee bank accounts to move money in and out of India. The funds in such an account can be repatriated in their entirety.
Restrictions and Investment Ceilings
The Indian government sets the FDI limit, and different restrictions have been set for other sectors. Over time, the government has gradually raised the ceilings. The vast majority of FDI ceilings are in the range of 26% to 100%.
The FDI ceiling for the business’s industry determines the maximum limit for portfolio investment in a listed company by default. Two additional limitations apply to portfolio investment. To begin, the total investment limit for all FIIs in a specific firm, including its sub-accounts, has been established at 24% of paid-up capital. The limit can be raised to the sector cap with the approval of the company’s boards of directors and shareholders.
Second, anyone FII’s investment in a single company shall not exceed 10% of the company’s paid-up capital. International corporations or individuals investing as a sub-account are subject to the same ceiling, just 5%.
Investments for Foreign Entities
Foreign corporations and individuals can gain exposure to Indian stocks through institutional investors. India-focused mutual funds are gaining popularity among retail investors. Some offshore instruments that can be used to make investments include participatory notes, depositary receipts and global depositary receipts, exchange-traded funds, and exchange-traded notes.
According to Indian regulations, foreign institutional investors can only issue participatory notes based on underlying Indian stocks to regulated enterprises. Small investors, on the other hand, can purchase American depositary receipts, which represent the underlying stocks of well-known Indian firms listed on the NYSE and Nasdaq. ADRs are denominated in dollars and are governed by the Securities and Exchange Commission of the United States (SEC).
Global depositary receipts, meanwhile, are traded on European exchanges. However, many promising Indian companies are still not using ADRs or GDRs to raise funds from international investors.
ETFs and ETNs based on Indian stocks are also available to retail investors. India-focused exchange-traded funds (ETFs) invest primarily in Indian stock indices. The majority of the stocks in the index are already traded on the NYSE and Nasdaq.
The top ten stocks to invest in India in 2022 are listed below.
This year has been a good year for Indian equity markets, with the Nifty up over 22%. With gains of roughly 43 per cent and 53 per cent, respectively, the Nifty Midcap 100 and Nifty Smallcap 100 excelled. Due to the continued economic recovery and high-profit growth, Indian equity markets are expected to extend their gains in 2022. The recent bull market could last for a few more years, with multifold returns based on the past three decades.
1. Bharti Airtel
Bharti Airtel Limited is a telecommunications services firm headquartered in New Delhi. Depending on the country of operation, It offers 2G, 4G LTE, 4G+ mobile services, fixed-line broadband, and voice services. Airtel’s VoLTE technology was also pushed out across all Indian telecom circles. It is India’s third-largest network provider and second-largest mobile network operator. Airtel was named India’s second most valuable brand in Millward Brown and WPP plc’s first-ever Brandz ranking.
Airtel is credited with developing the minute’s factory’ model of low cost and large volume manufacturing by outsourcing all of its business processes except marketing, sales, and finance. Several operators have since embraced the method.
Due to higher ARPU and steady growth in the 4G client base, the company produced a robust set of financial results in Q2 FY22. The Airtel Business section, which provides businesses with a wide range of digital solutions, might be the company’s next growth engine. Purchasing Airtel is a long-term investment. Choice Equity Broking has recommended the company as a “BUY,” with a price of Rs 956 per share and a 41.5 per cent potential upside.
2. Aditya Birla Fashion & Retail
Aditya Birla Fashion and Retail is a Mumbai-based Indian fashion retail firm. ABFRL operates 3031+ locations across India, with roughly 25,000 multi-brand outlets.
Madura Garments began in 1988, was bought by the Aditya Birla Group in 1999, and was renamed Madura Fashion & Lifestyle in 2010.
In 2008, India’s first and largest multi-retail brand for international companies, The Collective. In 2016, ABFRL signed an agreement with Ted Baker, a global luxury brand, and a Memorandum of Understanding with Forever 21 for India business.
Ralph Lauren Asia Pacific Limited (“RLAPL”), which sells garments and accessories for men and women under the brands “Polo Ralph Lauren” and Ralph Lauren, signed a Store License and Distribution Agreement with ABFRL in 2018.
Recent equity infusions have helped ABFRL’s balance sheet, with net debt dropping from Rs 2500 crore to Rs 870 crore. The stock is might hit Rs 360 in the coming months, representing a 161.8% external retracement of the last loss in 2020.
3. ICICI Bank
ICICI Bank Limited, headquartered in Vadodara, Gujarat, is an Indian multinational bank and financial services firm. Through several delivery channels and specialised subsidiaries, it provides banking products and financial services to corporate and retail customers in investment banking, life, non-life insurance, and asset management.
It has a presence in seventeen countries and has 5,275 branches and 15,589 ATMs across India.
The bank has branches in the USA, Singapore, Hong Kong, Qatar, Oman, Dubai International Finance Centre, China, and South Africa and offices in the United Arab Emirates, Bangladesh, Malaysia, and Indonesia.
The lender had a strong second quarter of FY22, with PAT growing by 30% year over year. NII climbed by 24.8%, while NIM improved by 11 basis points due to strong growth in the high-margin unsecured portfolio. Choice Broking has assigned the company a “BUY” rating and a target price of Rs 900, with the independent banking operation valued at Rs 710 and the subsidiaries valued at Rs 190. The stock has a potential upside of 22.3 per cent.
4. United Spirits
United Spirits, founded in 1999, is a Large Cap business in the Beverages – Alcoholic sector with a market capitalisation of Rs 66465.64 cr.
United Spirits key products/revenue segments for the fiscal year ending 31-Mar-2021 are Beverages (Alcohol), Income From Franchise, Scrap, and Other Operating Revenue.
This year, liquor stocks have made a huge return, hitting new highs and completing a long-term chart turnaround. The price of United Spirits has broken out of a six-year consolidation phase, signalling a structural shift and the beginning of a new bull cycle. The stock price is expected to surpass Rs 1,000 shortly. With a possible upside of 22%, ICICI Direct has set a target price of Rs 1080.
5. Schaeffler India Ltd
Schaeffler India Limited is a leading ball and rolling bearing producer in India, focusing on the automotive and industrial markets. Maneja and Savli, in Vodadara, Gujarat, are the company’s manufacturing sites. Schaeffler India Limited is a subsidiary of Schaeffler AG, a world-renowned Euro 14 billion global automotive and industrial supplier based in Herzogenaurach, Germany. In the Indian passenger car industry, Schaeffler India is the leading provider of hub bearings.
Schaeffler India has had a long relationship with Indian Railways. Schaeffler India serves a range of sectors, including Electrical Engineering for Construction Machinery Equipment for conveying fluids (fluid technology) Gears for Industry Cement & Mining Generation of Electricity Agricultural Engineering.
In Q3 CY2021, the company’s overall operating income increased by 20.7 per cent to Rs 1,487.6 crore. The EBITDA margin rose by 99 basis points from quarter to quarter, resulting in a 27.7% increase in EBITDA. The profit after tax was recorded as Rs 170.8 crore. Beverages, Income From Franchise, Scrap, and Other Operating Revenue are United Spirits’ primary products/revenue segments for the fiscal year ending 31-Mar-2021.
This year, liquor stocks have made a massive comeback, reaching record highs and completing a long-term chart turnaround. Its price has broken out of a six-year consolidation period, indicating a structural shift and the start of a new bull cycle. In the future, the price is likely to cross Rs 1,000.
6. HDFC Life Insurance Company Ltd
HDFC Life Insurance Company is a long-term life insurance company based in Mumbai that offers individual and group insurance. It was founded on August 14, 2000.
HDFC), one of India’s largest housing finance organisations, and Abrdn have partnered to form the company. HDFC Ltd. and Standard Life (Mauritius Holdings) 2006 Ltd., the promoters, own 51.69 per cent and 34.75 per cent of HDFC Life, respectively, as of March 31 2020. Public shareholders own the rest of the stock.
The company recorded strong performance in the second quarter of FY22, with a premium of Rs 6,596 crore, up 12.3% year on year. Year over year, the overall premium climbed by 14.2 per cent. The company will improve its performance metrics on the back of tailwinds in the sector and the Exide Life deal. Choice Broking values HDFC LIFE at P/EV multiple of 4.4x to arrive at a target price of Rs 833 and an upside potential of 30.3%.
7. ABB
ABB is a leading global technology company that helps to transform society and industry for a more productive and sustainable future. ABB pushes the limits of technology by combining software with electrification, robotics, automation, and motion portfolios to achieve new performance levels. Its success is fuelled by about 110,000 employees in over 100 countries, and the company has a 130-year track record of excellence.
The BSE capital goods index is waking up after a 13-year slumber. With a high-low ratio, it has already broken out of a decade-long consolidation and continues going higher. The stock has retraced the last falling section more quickly, with the nine-quarter drop retraced in just four quarters. ABB’s shares could soar to Rs 2750. According to ICICI Direct Research, the stock has a 25% upside potential.
8. Hindustan Unilever Ltd.
HUL is an Indian consumer goods corporation based in Mumbai. It sells fast-moving consumer goods such as meals, beverages, cleaning supplies, personal care products, water purifiers, and similar items.
HUL was founded in 1931 as Hindustan Vanaspati Manufacturing Co. After a merger of constituent companies in 1956, Hindustan Lever Limited was renamed Hindustan Unilever Limited in June 2007.
In Q2 FY22, the company increased its consolidated top-line by 11.4 per cent (YoY) due to volume growth of 4% and pricing growth of 7%. HUL EBITDA climbed by 10.3%, while reported PAT increased by 10.5 per cent.
9. HCL Technologies
HCL Technologies, based in Noida, Uttar Pradesh, India, is an Indian multinational information technology (IT) services and consulting firm. It is an HCL Enterprise subsidiary. It became an independent company in 1991 when HCL entered the software services business. It has registered offices in 50 countries, including the UK, USA, France, and Germany, with a worldwide network of R&D, “innovation labs,” and “delivery centres,” with over 187,000 employees.
The IT sector has led the ongoing bull market and HCL. In Australia, Canada, France, Germany, and other nations, ER&D has increased TCV, broad-based growth across services, improved customer metrics, and strengthened management capabilities. With a target price of Rs 1485, ICICI Direct Research has an optimistic outlook on the firm.
10. Infosys
Infosys is a multinational information technology corporation based in India, specialising in business consulting, information technology, and outsourcing. The company is located in Bangalore and was formed in Pune. By 2020 sales projections, Infosys is the second-biggest Indian IT business and the 602nd largest public company globally.
It became the fourth Indian business to reach a market valuation of $100 billion on August 24, 2021.
Digital revenue grew by 42.4 per cent year over year, accounting for about 56.1 per cent of overall revenue. At a CMP of Rs 1,866, Infosys is currently trading at a TTM P/E multiple of 37.6x. Based on the excellent outlook and the company’s rising leadership in the market, the firm has set a price of Rs 2,150 per share, 15.2% higher than the recommended price.
Edited and published by Ashlyn Joy
