Thursday, 31 May 2018

10 wealth creating ideas that could return 20-50% in 1 year

Sampath Reddy of Bajaj Allianz Life Insurance is positive on consumption, private financials, IT and metals sectors.

One does not need 100 stocks to generate wealth but can achieve the same with a handful of stocks. Legendary investor Warren Buffett once said, “Wide diversification is only required when investors do not understand what they are doing." Hence, investor focus should be on a handful of stocks rather than creating a portfolio which consist of over 50 stocks.
Wealth creation requires patience and research. Returns from the markets are never linear. Hence, portfolio diversification is a must to ensure profitability. Not every stock will emerge a multi-bagger, but chances are that if you placed your bets on the right stocks you will be a happy investor at the end of the year.
With India’s macroeconomic cues slipping, earnings nowhere near the double-digit mark and looming uncertainty around the 2019 general elections, it will not be easy for investors to make money. The best strategy would be to bet on stocks that have declared strong January-March earnings and growth momentum.
Bulk of the market returns in 2017 was largely led by expansion in the price-to-earnings ratio. However, experts said they are seeing signs of a revival in earnings growth, with growth expected to pick up meaningfully in FY19.
“The long-term story for equities still remains intact, especially for those investing in a systematic manner. Going forward, market returns will be led by earnings growth rather than P/E expansion,” Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life Insurance, said.
He is positive on consumption, private financials, IT and metals sectors. “We prefer largecap equities to small/midcap ones, with current valuations at a significant premium in the latter segment.”
Here is a list of 10 buy ideas from different brokerages that can deliver 20-50 percent returns in the next one year:
Mahindra & Mahindra: Buy | Target raised to Rs 1,075 from Rs 960 earlier | LTP: Rs 895.60 | Return: 20%
CLSA maintains a buy rating on M&M post Q4 results but raised its 12-month target price to Rs 1,075 from Rs 960 earlier.
Domestic vehicle manufacturer Mahindra and Mahindra reported a 50 percent year-on-year rise in its net profit for the March quarter to Rs 1,155 crore on Tuesday.
M&M delivered a strong Q4 led by better-than-expected margins. The rural outlook improved on expectations of a normal monsoon and expectations of a big MSP hike.
New MPV launch in FY19 is likely to boost SUV segment volume. CLSA expects strong 18 percent EPS CAGR over next two years, and valuations still remain attractive.
Dish TV: Buy | Target: Rs 100 | LTP: Rs 74.45 | Return: 34%
CLSA maintains a buy rating on Dish TV with a target price of Rs 100. The direct-to-home operator reported a consolidated net profit at Rs 118.21 crore for the fourth quarter ended March 2018.
The company had posted a net loss of Rs 29.49 crore during the January-March quarter a year ago, Dish TV said in a BSE filing.
The management reiterated merger synergy of Rs 500 crore in FY19. CLSA sees 10 percent EBITDA CAGR over FY19-21. The ongoing open offer caps downside risk for the stocks, said the note.
Commenting on the outlook, Dish TV said that it expects the year to be positive as the company expects to outgrow the industry growth rate backed by the launch of new set-top-boxes that would be full HD compliant.
Prestige Estates: Outperform | Target: Rs 396 | LTP: Rs 260.95 | Return: 51%
Macquarie maintains an outperform rating on Prestige Estates with a 12-month target price of Rs 396. The realty firm reported 21 percent increase in its consolidated net profit at Rs 107.1 crore for the fourth quarter of last fiscal on higher sales. Its net profit stood at Rs 88.1 crore in the year-ago period.
The Q4 net profit was in-line with estimates. The pre-sales pick-up aided by new launches said the Macquarie note. The real estate major targets to launch at least one project in affordable housing.
Prestige Estates remains one of the preferred picks in real estate space, said the note.
Escorts: Buy | Target: Rs 1,150 | LTP: Rs 933.80 | Return: 23%
HSBC maintains a buy rating on Escorts post Q4 results with a 12-month target price of Rs 1,150. The growth momentum remains intact. Going forward, the margins are likely to improve across all businesses. Increasing captive financing is a key positive for future performance, said the note.
Bharat Petroleum Corporation: Buy | Target: Rs 568 | LTP: Rs 400.30 | Return: 42%
Motilal Oswal maintains a buy rating on BPCL post Q4 results with a 12-month target price of Rs 568. The EBITDA was above estimates led by core operating performance. The net profit benefitted by higher other income and lower tax rate.
Stabilisation of Kochi expansion is likely to expand Kochi refinery GRMs. Sharp correction seen in the oil & gas space due to rise in crude oil prices offers an attractive opportunity to add.
Larsen & Toubro: Buy | Target: Rs 1,730 | LTP: Rs 1365.20 | Return: 27%
CLSA maintains a buy rating on L&T post Q4 results with a target price of Rs 1,730. The Q4 results were a beat on guidance as well as on inflow and margins. The Hydrocarbon business is going to be the emerging star and fast-growing business going forward.
L&T has a credible strategy to improve both growth and its return on equity. The stock is a good proxy for domestic capex.
NTPC: Buy | Target: Rs 200 | LTP: Rs 165.30 | Return: 21%
CLSA maintains a buy rating on NTPC post Q4 results with a target price of Rs 200. The March quarter results were in line with estimates, but profit figure remains muted by higher cost.
Capacity additions are clearly on track. CLSA expects a marked pick-up in profit growth due to focused efforts to secure coal.
Capacite Infraprojects: Buy | Target: Rs 340 | LTP: Rs 282.80 | Return: 20%
Angel Broking initiates a buy call on Capacite Infraprojects with a target price of Rs 340. The company has a large order book with marquee client base which provides revenue visibility.
The company has a focused approach which leads to a strengthening of its position. Increased floor space ratio (FSI) to trigger construction work in Mumbai region. Expanding presence in cities with a high growth potential given revenue visibility.
Tech Mahindra: Buy | Target: Rs 880 | LTP: Rs 686.40 | Return: 28%
Goldman Sachs maintains a buy rating on Tech Mahindra post Q4 results but raised its 12-month target price to Rs 880 from Rs 824 earlier.
The Q4 results were above expectations on continued margin beat. The entire topline growth was led by enterprise business in Q4. Going forward, 5G remains a key structural growth opportunity for Tech Mahindra, said the report.
Bank of Baroda: Buy | Target: Rs 180 | LTP: Rs 138.70 | Return: 30%
Edelweiss maintains a buy rating of Bank of Baroda post Q4 results with a target price of Rs 180. The public sector lender posted a net loss of Rs 3,102.34 crore in the March quarter, missing estimates due to a jump in provisions for bad loans.
Provisions for non-performing assets for the quarter rose by 190 percent YoY to Rs 7,052.53 crore in Q4. The March quarter was marred by higher slippages, said the Edelweiss note.
However, the loan growth remains strong with better rated corporate and retail segments. The brokerage firm expects quality growth to gain traction in near future.
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Wednesday, 30 May 2018

These 20 stocks witnessed a FII trend reversal in Jan-Mar quarter; do you own any?

Sector-wise, FPIs bought into financials (non-banking financial companies and private bank), IT and metals and sold autos, utilities, state-run banks, energy and consumer staples.

Foreign institutional investors (FIIs) have turned cautious on Indian equities in 2018 due to increasing commodity prices, rise in US treasury yields, strengthening dollar-rupee, deteriorating macro-economic parameters and fluid political environment.
So far, FIIs have withdrawn over Rs 7,000 crore and nearly Rs 17,000 crore from equity and debt markets in May, respectively, according to data from Securities and Exchange Board of India. FIIs have turned net sellers in February, April and May.
Rising borrowing costs in the US, amid appreciation of the dollar-rupee, has put emerging market assets under pressure and will cap foreign portfolio investor flows into emerging markets, including India, Elara Securities said in a report. “Given the high valuation, weak corporate earnings and macro headwinds, we expect FPI equity flows to remain weak in Q1 FY19.”
In the quarter-ended March, FPIs remained net buyers of Indian equities to the tune of $2 billion as compared to $2.5 billion quarter-on-quarter. The net buying was largely due to participation in the primary issuance (qualified institutional placement, rights, preferential issuance) of Housing Development Finance Corporation (HDFC), Tata Steel and Idea Cellular.
The quarter also saw a reversal in FPI buying momentum (two consecutive quarters of buying followed by a quarter of selling) in M&M Financial Services, Idea Cellular, RBL Bank, Hindalco, Crompton Consumer, Torrent Pharma, among others, the report stated.

Sector-wise, FPIs bought into financials (non-banking financial companies and private bank), IT and metals and sold autos, utilities, state-run banks, energy and consumer staples.
Rakesh Tarway, Head of Research, Reliance Securities, said FPIs have reduced positions in interest rate sensitives and metals owing to increasing interest rates and high metal prices. “Fundamentally, too increasing interest rates will not augur well for interest rate sensitive stocks.” He expects stocks of companies in the export business to do well in the wake of a falling rupee.
According to Elara Securities report, FPIs held a concentrated portfolio, with top 10 stocks accounting for 45 percent of their total portfolio. At a sector level, financials and IT account for 50 percent of total holding.
Momentum was seen in stocks like (two consecutive quarters of selling followed by a quarter of buying) Max Financial, Amara Raja Batteries, Larsen & Toubro (L&T), HDFC, Tata Consultancy Services (TCS), NMDC, PI Industries and Castrol India.
Dinesh Rohira, Founder and CEO,, said FPIs have largely focused on value-driven companies with a strong growth prospects. “The upsurge in valuation, especially in the midcap space, coupled with weak growth outlook, has forced foreign investors to buy grown up and stable companies.”
He added that with positive quarterly results for most largecaps, and projections of faster growth, FPIs drew exposure to this space and adopt a ‘buy on dip’ strategy in a stretched valuation regime.
FPI overweight/underweight position
FPIs are significantly overweight on NBFC and underweight energy stocks. On a sequential basis, they have incrementally turned positive on private banks, NBFC and metals and negative on industrials, utilities, state-run banks and consumer discretionary.
At the stock level, FPIs are overweight on HDFC, Axis Bank and Bharti Infratel and underweight ITC, L&T, Reliance Industries, State Bank of India, and Hindustan Uniilever. On a sequential basis, FPIs have turned positive on HDFC and corporate lenders like Axis Bank, SBI and ICICI Bank.
An analysis of FPI overweight and underweight stance over the past eight years by Elara Securities suggests that these investors have been consistently overweight on consumer discretionary, NBFC, pharmaceuticals, materials, and telecom. They remain underweight on state-run banks, consumer staples, energy, industrials, and utilities.
In the period under review, they have had the highest overweight stance on sectors such as NBFC and cement while being underweight on energy.

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Tuesday, 29 May 2018

Sensex, Nifty consolidate after 3-day rally weaker rupee lifts IT stocks

Most Asian markets traded lower as investors focus on Italian politics and the fall in oil prices.
Buzzing: After being locked in lower circuit on Monday, shares of Manpasand Beverages continued to be locked in the same band today as well, as investors continued to be wary of corporate developments. This is despite the company trying to allay fears around the controversy surrounding its auditor, Deloitte, resigning abruptly.
The shares have lost 40 percent in this week based on two developments—resignation of its auditor and Board meeting on May 30 being cancelled.
On Monday evening, the company issued a statement to the exchanges, assuring investors that the situation involving Deloitte was ‘unfortunate’ but the decision was taken keeping in mind shareholders’ interest.
“Everything related to financial results announcement and the timing of this event is purely coincidental and has no direct correlation. The board meeting has been postponed and the new date will be announced shortly,” the company said in a filing to the exchanges. “This is just a minor hiccup and doesn't represent any long term business impact.”
The company on Monday had informed the NSE that a Board meeting, scheduled on May 30, 2018, which was supposed to consider results as well as dividend issue, was cancelled.
What could have added to the downfall is the company informing BSE on Sunday that its auditor Deloitte Haskins and Sells had resigned from the firm with immediate effect. It subsequently appointed M/s Mehra Goel and Co as the auditor of the firm.
Market Update: The market consolidates after sharp rally in previous three consecutive sessions, as investors monitor the movement in rupee and crude oil prices.
The broader markets also traded in line with frontliners while all sectoral indices are in the red barring IT and Auto.
Technology stocks are on buyers' radar after the rupee falls 28 paise to 67.70 against the US dollar.
The 30-share BSE Sensex rose 6.16 points to 35,171.64 and the 50-share NSE Nifty gained 1.80 points at 10,690.50.
Buzzing: Rural Electrification Corporation (REC) share price declined 2 percent after it reported a 37 percent decrease YOY in its March quarter net profit at Rs 834.79 crore, missing estimates due to an increase in provisions for bad loans.
A Reuters poll of equity analysts had estimated profits to fall marginally to Rs 1224.3 crore in the fourth quarter of FY18.
The company had posted profit of Rs 1319.2 crore in the fourth quarter of last fiscal.
Interest income saw a 5 percent drop YoY in Q4 to Rs 5,444.59 crore. Other income dropped to Rs 33.03 crore in Q4 from Rs 131.70 crore in the year ago period.
Earnings Reaction: Aurobindo Pharma share price fell 4 percent after it reported a marginal decline in its net profit at Rs 528.5 crore for the fourth quarter ended March 2018. The company had posted a net profit of Rs 532.5 crore during the same period of 2016-17 fiscal.
Revenue from operations, however, rose to Rs 4,049.1 crore for the fourth quarter, as compared with Rs 3,641.6 crore in the similar period of 2016-17 fiscal, Aurobindo Pharma said in a regulatory filing.
Market Opening: Benchmark indices opened mildly lower on Tuesday morning due to profit booking after three-day run up. 
The 30-share BSE Sensex fell 56.44 points to 35,109.04 and the 50-share NSE Nifty declined 21.90 points to 10,666.80.
L&T, Tech Mahindra, TCS, Infosys, HCL Technologies, M&M, Bajaj Finance and Coal India are gainers.
Bank of India and Aurobindo Pharma plunged 5 percent each.
Vedanta, Sun Pharma, Lupin and SBI are under pressure.
Nifty Bank lost 130 points and Nifty Midcap shed 65 points.
Manpasand Beverages slipped 20 percent for second consecutive session.
Venus Remedies, DB Realty, Kwality, Gravita, Mercator and Fortis Healthcare fell up to 7 percent.
Oil India, NMDC, Bajaj Hindusthan, Dhampur Sugar, Dwarikesh Sugar, Reliance Communications and Edelweiss Financial gained 2-5 percent.
Earnings: State-owned United Bank of India reported a net loss of Rs 260.62 crore for the fourth quarter ended March 2018 due to high non-performing assets (NPAs). The Kolkata-headquartered bank had reported a profit of Rs 73.56 crore in the January-March quarter of 2016-17.
The bank's total income was Rs 2,635.69 crore in the fourth quarter of the last fiscal, a marginal decline from Rs 2,672.88 crore in the similar quarter in the year-ago period, it said in a regulatory filing.
The gross NPAs of the bank stood at 24.1 percent of the assets at end-March 2018, up from 15.53 percent at end-March 2017.
Similarly, the net NPA jumped to 16.49 percent of loans compared to 10.02 percent at the end of March 2017, reports PTI.
Board Meet: Lenders of bankruptcy-hit Ruchi Soya are likely to meet again on May 30 to discuss bids submitted by Patanjali Ayurveda and Adani group which are in the race to acquire the Indore-based edible oil firm. A Committee of Creditors (CoC) today met to discuss the bids of these two companies.
Patanjali had revised its bids upwards to about Rs 4,300 crore, which is around 30 per cent higher than the Adani's offer. Patanjali has also assured the lenders that it would invest extra capital required to revive the company.
Sources said that the CoC is likely to meet on May 30 to consider both the bids and decide on voting.
Haridwar-based Patanjali group had emerged as the front runner with a bid of over Rs 4,000 crore to acquire Ruchi Soya.
Oil Price Hike: Petrol and diesel prices continue to soar and touched another peak on Monday. Petrol was hiked by 16 paise to Rs 86.24 per litre in Mumbai.
This is the 16th straight hike in a row. Diesel prices on the other hand, were hiked by 15 paise to Rs 73.79 per litre in Mumbai. Petrol prices in Delhi were increased by 16 paise to Rs 78.43 per litre and diesel by 14 paise to Rs 69.31 per litre.
Since the dynamic pricing system resumed on May 14, petrol and diesel prices have risen by Rs 3.8 and Rs 3.38 respectively in the last 16 days in Delhi.
Market OutlookICICI Securities
The short covering journey continued for a third day in a row with banking stocks taking the lead and helping broader indices to end with gains of over 80 points. As global crude oil prices started cooling off, oil marketing companies rose nearly 5 percent. Implied volatilities (IVs) also remained choppy due to which OTM writers got an added advantage. Nifty futures settled at an increased discount of 9 points with sharp decline in IVs. The highest Put base is still at the 10500 strike with 62 lakh shares while the highest Call base is at 10800 strike with 50 lakh shares.
The 1000 point rally in the past three days continued as the outperformance of banking stocks continued on Dalal Street. HDFC Bank, along with the PSU pack, lifted the index well above 26500. Looking at the Put option writing, we feel the support has shifted to 26200. The overall rally is likely to continue.
Market Pre-Opening: Benchmark indices are flat in pre-opening amid weak trade in most Asian markets. Investors focus on the movement of crude oil prices and rupee.
The 30-share BSE Sensex rose 15.87 points to 35,181.35 and the 50-share NSE Nifty gained 8.10 points at 10,696.80.
Vedanta plunged 10 percent. Aurobindo Pharma declined 1.6 percent.
L&T rallied 4 percent.
The Indian rupee opened at 67.62 against the US dollar, down 19 paise from previous close.
Most Asian markets traded lower as investors focus on Italian politics and the fall in oil prices.
Wall Street remain closed on account of a public Holiday on Monday.
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Monday, 28 May 2018

Top 12 stocks to invest ahead of May F&O expiry which could give up to 6-20% return

The first half of the week looked very ominous as we saw index sliding below the important psychological level of 10,500. Investors are advised to remain stock specific and square of long positions on rallies.

The Nifty50 closed flat with a positive bias for the week ended May 25 above its crucial resistance level of 10,600. It was indeed a roller coaster rise for Nifty which rebounded nearly 200 points after hitting a low of 10,417 to close the week at 10,605 on Friday.
The Nifty50 is now trading above its 5-DEMA, 50-DEMA and 100-DMA which is a bullish sign; however, bulls will only be able to take control once Nifty closes above its recent top of 10,929 formed on May 15, 2018.
The first half of the week looked very ominous as we saw index sliding below the important psychological level of 10,500. Investors are advised to remain stock specific and square of long positions on rallies.
Now, the biggest question is whether markets are done with the correction or this is just a temporary bounce back?
“In our sense, recently there was a massive stock specific destruction seen in the market and in this course of action, so many individual counters entered an extremely oversold territory. Hence, some kind of breather was overdue in these names,” Sameet Chavan, Chief Analyst, Technicals, and Derivatives at Angel Broking told Moneycontrol.
“The last couple of days rally was mainly a short covering move in these beaten down counters. It may continue also for a while but we believe that this is just a short-term breather and at higher levels index is likely to face resistance in the zone of 10,650 – 10,720,” he said.
Chavan further added that for the first half in the forthcoming week, the ideal strategy would be to focus on individual stocks and look to liquidate positions at higher levels. On the lower side, the immediate support is seen in the range of 10,560 – 10,500.
Here is a list of top 12 trading ideas by experts which could give up to 6-20% return in the short term:
Analyst: Sameet Chavan, Chief Analyst, Technicals, and Derivatives at Angel Broking
Bajaj Finserv Ltd: Buy| Target: Rs 6,700| Stop loss: Rs 5,715| Return 17%
This counter has been enjoying a multi-year bull run for the last four years. There has been no major correction seen in this course of action, which is quite remarkable.
We can witness a series of breakouts in the ongoing bull run. More importantly, most of the breakouts are accompanied by a substantial rise in volumes, indicating strong buying interest at all-time highs as well.
We recommend buying on a minor dip towards Rs 6,000 for a near-term target of Rs 6,700. Traders can keep their stop losses below Rs 5,715.
MCX Ltd: Buy| Target: Rs 900| Stop loss: Rs 765| Return 10%
After a long consolidation, the stock has finally managed to burst through its recent congestion zone. Recently, several attempts to surpass the Rs 800 mark turned unsuccessful; but this time, there was a decisive breakout seen with humongous volumes.
When such price and volume activity happens after a consolidation phase, the stock prices generally have a tendency to continue this momentum without giving a major dip in the coming days.
Hence, one can look to go long around Rs 805 for a target of Rs 900 by following a strict stop loss placed below Rs 765.
Balrampur Chini Ltd: Buy| Target: Rs 84| Stop loss: Rs 64| Return 20%
Of late, we have been quite persistent on this stock, expecting a possibility of a decent short-term bounce back after forming a base around the Rs 60 mark.
Last week, the stock prices traversed the upper end of the small ‘falling Wedge’ pattern around 65. After seeing some volatile moves, the stock is now poised for a healthy relief rally towards 84.
On the weekly chart, the stock prices confirm their strength by giving a close above the ‘5-EMA’ for the first time in last six months.
In addition, the ‘RSI-Smoothened’ is on the verge of giving a positive crossover well inside the oversold territory. One can look to go long for a target of Rs 84 by following a strict stop loss below Rs.64.
Analyst: Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities
Tata Elxsi: Buy| CMP: Rs 1,232.75| Target: Rs1,318| Stop loss: Rs 1,180| Return 7%
Since the start of this month, Tata Elxsi was in major consolidation mode within Rs 1,223-1,137 band on the daily chart. It gave a breakout at Rs 1,223 levels and is sustaining above the same.
The stock is also sustaining above its 20-day SMA which supports the bullish sentiments ahead. On the volumes front, the stock has witnessed a significant rise around breakout level indicating increased participation on the rally.
Both daily and weekly strength indicator RSI along with the momentum indicator Stochastic are in a bullish territory and are sustaining above their reference lines which signals strength and upward momentum in price.
Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 1,300-1,318.
Berger Paints: Buy| CMP: Rs 296.30| Target: Rs 318| Stop loss: Rs 287| Return 7%
The most prominent observation on the price chart of Berger Paints is that the entire consolidation underway since January 2018 till date has taken the shape of a “Rounding Bottom” formation on the weekly chart.
The stock has given a breakout at 282 levels and sustaining above the same. The stock is forming higher top higher bottom formation on daily chart indicating sustained uptrend.
The daily and weekly RSI and Stochastic are in positive territory along with positive crossover indicating strength ahead. This breakout is accompanied with high volumes indicating increased participation.
The stock is also sustaining above its 20, 50 and 100 day SMA which signals a bullish trend in near term. We expect this stock to scale up further towards Rs 314-318 levels.
Radico Khaitan: Buy| CMP: Rs 441| Target: Rs 470| Stop loss: Rs 425| Return 6%
The stock has witnessed a pullback rally from its multi-week support of Rs 386. Since January 2018, Radico Khaitan was in major consolidation mode within Rs 440-320 band on the weekly chart.
It gave a breakout at Rs 440 levels and is sustaining above the same. The stock is also sustaining above its 20-day SMA which supports bullish sentiments ahead.
On the volumes front, the stock has witnessed significant rise around breakout level indicating increased participation on the rally.
Both daily and weekly strength indicator RSI along with the momentum indicator Stochastic are in bullish territory and sustaining above their reference lines which signals strength and upward momentum in price. Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 464-470.
Analyst: Vikas Jain, Senior Technical Analyst Reliance Securities
Capital First (CMP: 557): Buy | Target: Rs 620| Stop Loss: Rs 535| Return 11%
The stock has retraced 61.8% of prior upmove (from Rs 346 to Rs 902), where its medium-term moving average worked as the key reversal point.
The stock has closed at 8 days' high and with the sector in focus, it is expected to outperform, going forward. The key technical indicators remain bullish mode, which signals strength in the stock.
Kajaria Ceramics (CMP: 549): Buy | Target: Rs 589-610 | Stop Loss: Rs 515| Return 11%
The stock ended on a positive note after 2 weeks of consecutive decline, where its long-term rising trend line has supported the reversal. Convergence in RSI rise signals an overall positive trend. In case of any decline, its 200-week average will continue to work as key reversal point.
United Spirits (CMP: 3250): Buy | Target: Rs 3,550 | Stop Loss: Rs 3,060| Return 9%
The stock reversed after taking the support of prior multiple lows and rose to a 10-day closing high. The reversal in key technical indicators from their oversold zone signals a bullish trend reversal. In case of any decline, recent swing low will work as the key reversal point.
Analyst: Dinesh Rohira, Founder & CEO,
Jain Irrigation System Ltd: Buy | Target: Rs 123 | Stop-loss: Rs 94 | Return 18%
Jain Irrigation witnessed a series of correction after registering a 52-week high during the mid-January and broke below its crucial support level.
However, after a healthy consolidation near Rs 90 levels, the scrip made a positive momentum reversal in last week’s trade as it managed to close above its 100-200-days EMA levels placed at Rs 101 and Rs 95 respectively.
The scrip also witnessed a strong volume upsurge as it closed with about 6 percent gains on an intraday basis. The scrip formed a strong bullish candlestick pattern on its daily price chart indicating a reversal trend on its weekly price chart.
Further, a secondary momentum indicator witnessed a revival with weekly RSI level shifting upward from oversold-zone coupled with positive cue coming on MACD.
The support level for the scrip is currently placed at Rs 84 and resistance level from the upper band is placed at Rs 135. We have a BUY recommendation for Jain Irrigation which is currently trading at Rs 103.90
Just Dial Ltd: Buy | Target: Rs 575 | Stop-loss: Rs 480 | Return 13%
Just Dial continued with a positive momentum throughout the week despite a volatile broader market and retraced strongly after a making sharp correction near Rs 380 levels.
Further, it made a decisive breakout from its crucial resistance coming from its 50-days moving average and witnessed a robust volume growth, indicating a momentum buildup.
On the weekly price chart, after closing with about 9 percent intraday gains, the scrip made a solid bullish candlestick pattern, signaling a positive trajectory.
The weekly RSI level at 57 coupled with positive divergence on MACD indicates a buying regime at the current level. The scrip has a support at Rs 468 levels and resistance level at Rs 682. We have a buy recommendation for Just Dial which is currently trading at Rs 507.65
ITC Ltd: Sell | Target: Rs 250 | Stop-loss: Rs 285 | Return 8%
ITC continued to remain under pressure despite attempting to regain on a positive trajectory. The scrip broke below an important trend channel of Rs 282 in last week’s trade, and further, it slipped below the short-term moving average of 5-10-days level.
There was a negative signal from volume trend as it continued to consolidate. The scrip formed a solid bearish candlestick pattern on its weekly price chart after breaching below 10-days EMA level indicating a sustained pressure.
Further, the secondary momentum indicator continued to indicate negative signal with RSI slipping at 50s levels coupled with the bearish outlook from MACD trend.
The scrip is facing a resistance at Rs 296 levels and support at Rs 244 levels. We have a sell recommendation for ITC which is currently trading at Rs 272.30.
Disclaimer: The views and investment tips expressed by investment experts on are their own and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.
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Saturday, 26 May 2018

4 years of Modi govt: Investor wealth rose Rs 62 lakh cr and over 300 stocks turned multibaggers

A historic moment for D-Street as Modi-led government completes its fourth year in office on May 27. It has been an eventful journey for the market participants with benchmark indices hitting fresh record highs in the year 2018.
Although, both Sensex & Nifty corrected slightly from its record highs of 36,443, and 11,171 respectively which was recorded in January 2018, but most analysts see a continuation of the reform process in 2019 and index hitting fresh record highs soon, but investors should be more stock specific.
“The focus of Modi government for four years was on governance and economy. Well, that could change for the next one year as politics would be high on agenda. Moreover, the macro conditions have turned unfavorable,” Gaurav Dua, Head of Research, Sharekhan by BNP Paribas told Moneycontrol.
“Thus, the returns on the index level could be sober than last few years. However, the market would offer a lot of many making opportunities and among pockets of growth stocks especially the consumption space over the next one year,” he said. The total market cap of all BSE-listed companies rose by over Rs 62 lakh crore in the last four years. The BSE market cap rose from Rs 85 lakh crore recorded on May 26, 2014, to Rs 147 lakh crore recorded on May 25, 2018.
We have collated five different charts which track the journey of markets, rupee and crude oil in the last four years:
Movement of Sensex & Nifty:
The S&P BSE Sensex rallied from 24,716 levels recorded on May 26, 2014 to levels above Mount 34K in the year 2018, which translates into a gain of over 10,000 points or 40 percent.
“The 4 years of Modi government have been a roller coaster ride with its share of ups and downs. There was a lot of euphoria around the election of Mr. Modi as the PM of the country and the citizens looked up to him to bring a wave of change in the country,” Jimeet Modi, Founder & CEO, SAMCO Securities & Stock Note told Moneycontrol.
“The performance of the Modi government has been remarkable in terms of planning and execution of some policies whereas the macroeconomic numbers aren’t all that rosy,” he said.
The Nifty50 rose from 7,359 levels recorded in May 2014, to levels above 10,000 in May 2018. The Nifty closed at 10,605 on May 25, 2018, which translates into a gain of 44 percent in the last four years.

Movement of Smallcap index in last 4 years:
The S&P BSE Smallcap index rose nearly 90 percent in the last four years but as many as 377 stocks rose 100-6000 percent in the same period which includes names like Uniply Industries, Minda Industries, Avanti Feeds, Capital Trust, KEI Industries, TVS Electronics, HEG, IFB industries, Tata Metaliks, Rushil Décor etc. among others.
After rallying consistently for 3 consecutive years, small-cap stocks came under pressure in the year 2018 which halted or slowed down the winning momentum which started with the formation of the Modi government back in the year 2014.
Apart from earnings which have not picked up as expected, deterioration in the macro story seems to be acting as a big headwind for the sector, suggest experts.
“Smallcaps usually lead the rally in terms of gains in a bullish market scenario. The present correction which we are seeing is an overdue correction in prices. The rally actually halted since Q4 of FY 2018 where we have seen dull participation post then despite broader indices rallying almost 10 percent,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.
“The current correction seems to be fair though given overall change in fundamentals we expect the buying to come in when there is another correction of 7-10 percent. At that point in time, we would surely see some value appearing in stocks and small and midcap index,” he said.
Movement of Midcap index in last 4 years:
Midcap stocks surged in 2014 after Prime Minister Narendra Modi assumed office in hopes of pro-growth reforms and a strong bounce-back in economic growth.
As many as 38 companies have returned 100-600 percent in the last four years. These include Dalmia Bharat, IIFL Holdings, Natco Pharma, NBCC, TVS Motor Company, Page Industries, Biocon, Ashok Leyland, Rajesh Exports, and 3M India.
The BSE Midcap index, which nearly doubled since 2014, came under pressure in the last five months, weighed down by falling rupee versus the dollar, sharp selling by foreign institutional investors (FIIs) and market regulator Sebi’s reclassification of mutual fund schemes.
Since 2014, midcaps have faced three large round of corrections in January 2016, November 2016 and May 2017. Analysts advise investors to stick with companies which have done well rather than trying to catch the falling knife.
“I think the midcap companies that have done will continue to do well only if they support the earnings growth. As most of these companies are expensive therefore any decline in revenue growth would impact their stock price. Investors should look for companies which continue to show revenue and PAT growth,” Vinay Khattar, Head Edelweiss Investment Research told Moneycontrol.
“Investors should rejig their portfolio, only if the stocks are very expensive and valuations are ahead of their growth. PEG (price to earnings growth) which is a key indicator to determine the valuation should be looked at. Also look for sectors which are doing well like cement, metals, chemicals etc.,” he said.
Valuation-wise midcaps are still trading at premium valuations as compared to the large-caps. If investors are not ready to hold the stock for a long time of 3-4 years then they should exit from the winners which have given a multi-bagger return, suggest experts.
Movement of Crude oil:
The Narendra Modi government has been lucky on the monsoons and oil front in the first four years, but external sector risks will be testing it in the crucial fifth year, according to rating agency Crisil.
The fiscal and current account deficits (CAD) have also improved in the last few years, but there have been some reverses in the last year.
Even though price rise has broadly been under check due to factors like good monsoons and low crude prices, the present scenario of a rise in crude could be a testing one.
The gross domestic product grew 7.3 percent in the last four years, which is slower than the 7.6 percent average clocked in the previous decade under the UPA regime, but there has been "visible improvement" on other macro indicators, Crisil's chief economist Dharmakirti Joshi said.
A raft of reforms and repair, disruptions, and slowing growth has also dominated the first four years. The government has pursued a "prudent policy stance" and there have been improvements in key macro indicators, the report by the research wing of the rating agency said.

Movement of Rupee:
Over the last four years, the rupee moved from Rs 58.72 against the dollar on May 26, 2014 to Rs 67.75/USD at as on May 25, 2018, implying a depreciation of around 15 percent in the last four years.
A fall in rupee usually dents FII flows. “A falling rupee dents FII’s dollar-denominated returns. FIIs typically hold their future investments in case they fear rupee to depreciate,” Alok Ranjan, Head of Research, Way2Wealth Brokers Pvt. Ltd told Moneycontrol.
“In the past, there have been several instances of currency depreciation eating away a good part of FIIs earning when they wanted to take some profits off the table. This makes them cautious if currency outlook is not conducive,” he said.
Abhishek Goenka of IFA Global says that USD-INR at 70 could be a new normal can be seen in early 2019. After breakout above 65.35 levels, we have seen that the USD-INR pair is convincingly trading above 2 std. deviation on a weekly basis.
"The pair can be seen moving further towards its all-time high of 68.90 by the end of this year and extension of the bullish leg beyond this level could take the pair higher towards 70 marks by the 1st quarter of 2019," he said.

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