Wednesday 29 November 2017

S&P 500 and NASDAQ 100 Forecast

  20:01      No comments   Edit

S&P 500

The S&P 500 initially went sideways during the trading session on Tuesday, but then broke above the 2605 level, to break towards the 2016 handle. This market is a little overbought at this point, so for short-term pullbacks offer buying opportunities to take advantage of the break out. I look at the 2600 level underneath as the short-term floor in the market, and I think that we will continue to go much higher. With this being the case, it’s likely that the market will probably go to the 2650 level after that, and possibly beyond. Pullbacks should offer value at best, but if we were to turn around and break below the 2590 handle, the market could find itself selling off a little bit more significantly. I think the selloff is probably needed, but it is obvious that the market cannot sustain any bearish pressure, so in the meantime buying on the dips probably remains the only thing you can do.
I recognize that the 2625 level is going to be a target as well, as it has a certain amount of psychological importance. The S&P 500 has gone sideways for a couple of days, so I think that the momentum could stick with this market to the upside for the next couple of days, but eventually we will need to pull back as the market has been overbought for so long. If the US dollar starts to strengthen, you could see this market pull back in general, but I don’t think it would be a longer-term issue, rather than a short pull back. Ultimately, I think that the algorithmic traders continue to lift the S&P 500 every time we fall anywhere near 1%. It looks like the machine-driven buying continues.

Dow Jones 30

The Dow Jones 30 exploded to the upside on Tuesday, as we have extended gains above the 23,700 level. The market is getting parabolic again, so a pullback is probably coming. I look at a move like this as one that you need to wait for value to get involved. Buying at these high levels would be very risky, and essentially “chasing the trade.” In general, this is a market that could drop back towards the 23,600 level, where I would expect to see quite a bit of resistance that has turned into support now. I believe that the 23,500 level has now proven itself to be a bit of a floor, and that we are going to go looking towards the 24,000 level. A weakening US dollar should continue to help as well. Also, with the United Kingdom reaching a divorce bill agreement with the European Union, I think we are going to see bullish attitude and markets around the world.

NASDAQ 100

The NASDAQ 100 continues to go sideways, and therefore I think that we are trying to build up momentum over here to go higher. The 6450 level above is a target, and then obviously the 6500 level as it is a large, round, psychologically significant target. I believe that there is plenty of support at the 6400 level, that extends down to the 6375 level. The moving average is on the stochastic oscillator trying to cross to the upside, so therefore think it’s only a matter of time before the buyers enter and continue to try to drive the momentum higher. With the Dow Jones 30 and the S&P 500 breaking out to the upside, you would think that the NASDAQ 100 will follow shortly.


MORE WILL UPDATE SOON!!

Top 11 small & midcap stocks in LIC portfolio which have given multibagger returns

  19:54      No comments   Edit

Life Insurance Corp. of India (LIC), the country’s largest institutional investor, has significant exposure in the small and midcap space.


Big returns in small packets! Well, this is true for stocks especially in the small and midcap space which have seen re-rating by the market. Midcaps now trade at a 45 percent premium to the Nifty in terms of P/E.
The small and midcaps have been outperforming benchmark indices throughout this week. The S&P BSE Midcap index rose to a fresh record high of 17,093 while the S&P BSE Smallcap index rallied to a record of 18,273 on Tuesday.

The broader market saw buying interest on a day when both Nifty and Sensex closed in the red. The trend is unlikely to get challenged anytime soon as experts feel that there is a lot of money waiting on sidelines especially for stocks which can deliver growth.
Life Insurance Corporation of India (LIC), the country’s largest institutional investor, has significant exposure in the small and midcap space.
Out of 108 stocks in its portfolio, top 11 stocks based on return given belong to the mid and smallcap space. These stocks have more than doubled investors’ wealth so far in the year 2017.
Stocks which saw a gain of 100-280 percent rally in the current calendar year include names like Hexa Tradex, RCF, Bengal & Assam Company, Punjab Alkalies, Jindal Saw, JP Associates, KEC International, ITDC, Dewan Housing Finance, Future Enterprises, and Shalimar Wires.
According to a recent media report, Life Insurance Corp. of India (LIC), booked a trading profit of at least Rs13,500 crore from the sale of equity holdings in the first half of the current financial year, as stocks scaled record highs.
The figure marked a 23.8% increase over the Rs10,900 crore in trading profit that LIC earned in April-September 2016 through investment redemptions, the media report said which was released earlier this week.
As many as 33 stocks got added to LIC’s portfolio for the quarter ended September when compared with June quarter which include names like Adani Ports, Assam Company, Bank of Baroda, Bharati Defence, Canara Bank, Coal India, JBF Industries, Power Grid, Tata Elxsi, Wockhardt, India Cements etc. among others, according to Capitaline data.
The largest institutional investor pulled out money from as many as 21 companies which include names like Aban Offshore, BSE, Dredging Corp, Gokak Textiles, Oriental Bank of Commerce, Infosys, Oriental Bank of Commerce, Rathi Steel, Tata Motors etc. among others.
What should investors do?
The small and midcaps stocks are known to deliver impressive growth when compared to largecap peers especially in a low growth rate environment.
With high liquidity and investors looking for ‘value’ outside the large cap space, small & midcap stocks have seen significant appreciation. While the Nifty trade at 26x trailing PE, the small and midcap index is trading at historic highs of over 50x trailing PE.
Obviously the valuations thereby leave significant room for disappointment on the earnings growth and ROE fronts in comparison to what valuations are implying. There is a need for a constant reality check in terms of earnings growth potential in stocks which have given astronomical returns in the short run.
Over the last 12 months, midcaps have delivered 23 percent returns, as against 20 percent by the Nifty. In the last five years, midcaps have outperformed the Nifty by 68 percent.
We do not recommend booking profits across the board. Strategy differs from stock to stock. Overall there has been a re-rating of the small cap and mid cap space and now the valuation gap has disappeared.So, tactically one should reduce exposure to small and midcaps and keep 20% of the money earmarked for these stocks into cash.

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: 9 stocks and 1 sector being tracked by analysts today

  15:08   2 comments   Edit

L&T
Brokerage: Macquarie | Rating: Outperform | Target: Rs 1,590
The global research firm said that valuations could catch up as triggers are in place. Further, closure of big ticket orders in Q3/Q4 is a catalyst.

Godrej Consumers
Brokerage: Macquarie | Rating: Outperform | Target: Rs 1,159
The firm said that Godrej Consumer is the top pick in Indian consumer sector.

Brokerage: Macquarie | Rating: Upgrade to Outperform | Target: Rs 310
The global research firm said that it expects domestic coal market to remain tight in near term. 6% dividend yield reduces downside & makes risk-reward attractive, it said, adding that lower supply & strong global prices to help e-auction prices. Macquarie also expects EPS growth to resume after second half of this fiscal.

Brokerage: CLSA | Rating: Buy | Target: Raised to Rs 707
CLSA said that the company is favourably placed to leverage a pick-up in advertising post GST rollout. Further, gains in both network & Hindi GEC viewership are extensive.

Brokerage: CLSA | Rating: Buy
The brokerage house said that JioPhone could drive next leg of growth for Jio after a fabulous first year. It said that the telecom firm achieved 12% subscriber market share one year after its Launch and is also very close to becoming the second largest operator in urban areas. Going forward, it said that ramp-up of its JioPhone will enable it to target untouched feature phone market. On a separate note, it added that start Of downstream expansion will drive a doubling of EBITDA over FY17-20.

Brokerage: Jefferies | Rating: Initiate with Hold rating | Target: Rs 4,850
Jefferies said that it likes the firm for its strong execution in biscuits via distribution expansion, cost efficiencies. Further, strong execution in biscuits bodes well for revenue & margin and it expects EPS to rise at a 16% CAGR over FY17-20. It also said that given limited room for positive surprises, we are 5% below street.

Brokerage: Nomura | Rating: Buy | Target: Unchanged at Rs 880
The brokerage house said that Baddi Site 483 observations are concerning and that there are similarities between Glenmark’s Baddi & Lupin’s Indore & Goa observations. Further, it also said that it is concerning as Lupin recently received warning letter for the sites. Nomura is not expecting an approval from Baddi site until inspection is closed. Having said that, it said that financial impact of observations may be limited.

Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 215
Deutsche Bank said that the firm has started to grow its volumes way ahead of the market and this growth may sustain and aid incentives and RoE.

Brokerage: Deutsche Bank | Rating: Sell | Target: Cut to Rs 1,030
The global financial services firm said that FY17 orders were strong, but outlook still concerning. Further, the opportunity size remains stagnant for FY18. It also cut order inflow assumption by 3/7 percent for FY18/19. The brokerage also reduced revenue growth estimate by 4.5/3.8 percent by FY18/19.


SECTOR:Pharma
Brokerage: Goldman Sachs
The global research firm said that two years of intense US price erosion weigh on growth prospects of Indian generics. Further, it raised business price erosion assumption to 12 percent for next 3 years.
Brokerage: Axis Cap
Axis Cap said that channel inventory levels of domestic formulations improved to 32 days in October. Firms with strong brands or higher chronic share outperformed peers. The company expects growth for domestic formulation firms to improve to mid-teens in H2FY18/FY19.


MORE WILL UPDATE SOON!!


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