The monsoons were generous, the macroeconomic numbers are strong, industrial activity has picked up, order books are bursting at the seams, corporate results are impressive, and sustainable, interest rates are down, inflation is under control, FIs are pouring it in, and forex reserves crossed the $100 billion-mark last fortnight for the first time. Now if ever there was a good time to invest in stocks, it's now. Expect some minor corrections, but the long-term trend is clearly bullish. Here are 10 stocks that could beat the market in 2004.

HDFC (Rs 659)
Synonymous with Indian households over several decades as the most trusted and friendly home loan provider, HDFC's focus on the retail segment is paying rich dividends. What should also hasten the growth impetus is the reduction in interest rates coupled with very realistic property prices.

Aventis Pharma (Rs 682)
Aventis is one of the most profitable MNC pharma companies and operates in the fast-growing cardiovascular, anti-allergic, and anti-infective segments. "A niche focussed product portfolio, with presence in several high potential areas and growth in exports makes it a company with strong future prospects," avers Rajiv Thakkar, Head (Equity Research), Parag Parikh Financial Advisory Services. Since the company invests large amounts of monies on a small basket of products, it derives benefits of focussed marketing, economies of scale, and tremendous brand longevity.

Hero Honda (Rs 462)
Improvement in the agricultural sector on the back of good monsoons is expected to translate into strong growth in motorcycle sales in the second half of the current year. Hero Honda is also expected to benefit from the soft interest rates that have driven demand for two-wheelers. "We expect the company to post a net profit of Rs 400 crore in the second half of 2004 as against Rs 210 crore achieved in the first half," says Motilal Oswal, CMD of Motilal Oswal Securities.

Nestlé (Rs 660)
Nestlé has been consistently delivering robust topline and bottomline growth driven by its domestic foods business. "A diversified product portfolio coupled with continuous new launches should see the growth momentum continuing into the foreseeable future," says Thakkar. In terms of ROCE (Return On Capital Employed), this company is the best in the industry with an RCCE of over 100 per cent thanks to the limited capex requirement and an efficient working capital management.

BHEL (Rs 490)
BHEL derives over 65 per cent of its revenues from the power sector. The expected capacity additions by power companies and the reforms happening in the industry would benefit BHEL immensely. "The company has a significant order book position," says Nilesh Shah, CEO (Broking) of Edelweiss Capital.

Indian Hotels (Rs 460)
Its prospects are getting better by the day thanks to the ever increasing number of business visitors, as well as leisure travellers. The company is building its brand and looking beyond India for expanding its chain of properties. "The company should get 2.5 to three times book value (which means that its market value of assets is much higher than its book value)," says Chetan Shah, Head (Research), Quantum Securities.

SBI (Rs 522)
The largest bank in the country has caught up rapidly on the technology front over the last two years and should make similar progress with its asset quality as well. The SBI management expects the pressure on net interest margins (NIMs) in the last quarter to subside. A strong growth in NIMs is expected at 14-15 per cent in the third quarter "We expect earnings to grow by 21 per cent in fiscal 2004 and 16 per cent in 2005. The consolidated EPS for FY04 would be Rs 102, giving the stock a P/E of 5x," says Oswal. Now isn't that attractive!

Tata Motors (Rs 438)
The auto giant's design to execution capabilities make it unique in the domestic sector. The recent buoyancy in the vehicles market is expected to spill over to the next fiscal. "At lower break-evens the profits will be strong," points out Shah of Quantum.

GE Shipping (Rs 147)
Freight rates are expected to give a strong fillip to the company's earnings in 2004. Despite the cyclical nature of the industry, the performance of the company has been good. With significant acquisitions in the current fiscal, the growth momentum should continue right through till 2005.

GAIL India (Rs 226)
This gas distributor will operate the national gas grid, which is estimated to be operational by 2008-09. Under the administered price mechanism, GAIL's financial performance has been steady. But market-driven pricing will now add some more sheen to the bottomline. What should also send this stock heading northward is the 10 per cent equity dilution recently approved by the Cabinet Committee on Divestment.

(Stock prices as on December 26, 2003)

-Shilpa Nayak