Indian stocks: three long-term winners the market has missed
Professional investor Nitin Bajaj of the Fidelity Asian Values trust picks three of his favourite Indian stocks to buy now.

I have a simple investment philosophy: buy good businesses run by competent and honest people, and buy them at a price that leaves enough of a margin of safety for mistakes or bad luck. I try to buy companies that other people are not looking at. That is where I find bargains and an adequate margin of safety. This process tends to lead me away from big stocks.
As a result, Fidelity Asian Values has most of its capital deployed in small companies (those with a market capitalisation of up to £5bn); stocks above that threshold only make up about 20% of the trust’s holdings. The trust also has a value bias given my focus on companies that are mispriced, either because they are yet to be discovered by investors or are currently undervalued owing to near-term concerns.
With value-investing out of favour, the current market offers unprecedented opportunities to invest in good companies at competitive prices, while demanding patience in the near-term. Several stocks in our portfolio, despite delivering good operating performances and being undervalued, have not appreciated, as a narrow group of stocks in a few sectors have carried the market.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But our stocks’ long-term prospects remain promising. If investors can find businesses capable of growing revenues while earning high returns on capital, and purchase them at an attractive price, they will go a long way towards attaining their financial objectives.
A profitable power player
Among the stocks being ignored by a market focusing on growth stocks is Power Grid Corporation of India (Mumbai: POWERGRID), one of our largest holdings. Power Grid is a high-quality, regulated monopoly for electricity transmission in India and has an enviable track record of growth, stability and return on equity (a key gauge of profitability). The stock is trading on less than eight times earnings, yields 6% and will grow profits this year, despite Covid-19. Irrespective of its strong fundamentals, the stock has been sold off owing to the pandemic.
Financial stocks you can bank on
Similarly, high-quality private-sector banks in India have underperformed so far this year and trade at appealing valuations. HDFC Bank (Mumbai: HDFCBANK), the largest private-sector bank in India, is one of the trust’s top holdings.
It has an impeccable track record of consistently delivering growth superior to the rest of the industry and has maintained the best asset quality among banks across several economic cycles. It has an excellent management team, strong systems and processes, and enjoys a low cost of funds. Another key holding, Axis Bank (Mumbai: AXISBANK) is India’s third-largest private sector bank. It has one of the best liability franchises in the country and only HDFC Bank boasts a lower cost of funds. Its ratio of current accounts to savings accounts (Casa), another way to gauge banks’ costs and profitability, is slightly better than HDFC Bank’s.
It also has one of the best returns on assets in the industry. These banks will come out of this challenging operating environment in a stronger position than their peers, particularly the inefficient government-owned banks, and gain market share in the process.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Nitin Bijaj manages Asian Smaller Companies Fund (SICAV) and Asian Values PLC at Fidelity. Nitin started at Fidelity in 2003 as a research analyst in London. In 2007, he became an Assistant Portfolio Manager in 2007 for the Fidelity Global Special Situations Fund in the UK, then in 2009 Nitin moved to Mumbai to manage Fidelity’s domestic Indian equity funds. In 2012, he moved to Singapore to manage the Fidelity Asian Smaller Companies Fund (SICAV) which he does to this date.
-
UK-US trade deal announced: US cuts tariffs on UK car imports to 10%
Keir Starmer and Donald Trump have announced a UK-US trade deal, but the US president has refused to lift baseline tariffs on most UK goods. What does it mean for the UK?
-
How to use mid-caps to diversify from the US
Medium sized companies are overlooked by investors but could offer an attractive ‘sweet spot’. We consider the case for mid-caps amid market volatility.
-
Will Comstock crash – or soar?
Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'
Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?
Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
'Technology will determine tomorrow’s top stocks in emerging markets'
Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airports
Most investors can’t get their hands on airports. Here are two ways you can
-
Three British mid-caps that could make 'attractive' investments
Opinion Charles Luke, manager of the Murray Income Trust, highlights three UK-listed mid-cap companies, as he tells us where he'd put his money
-
Fat profits: should you invest in weight-loss drugs?
The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategy
Ramsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs