Nearly 30 stocks where MFs raised stake more than doubled wealth in 2017; do you own any?

Retail investors have pumped in Rs1.26 lakh crore into mutual funds in the month of November, driving industry assets under management to an all-time high of Rs21.8 lakh crore.

After a flat 2016, bulls clearly dominated D-Street in 2017 as benchmark indices rallied nearly 25 percent in the year. The biggest contributor to the rally were retail investors as more household savings got channelized into equity markets via mutual funds (MFs).

Small and midcap stocks rallied, thanks to record inflows from mutual fund throughout the year 2017. As many as 28 stocks in which fund managers raised stake throughout 2017 more than doubled investors’ wealth which includes names like HEG, Yuken Ltd, V2 Retail, Dilip Buildcon, Minda Industries, SpiceJet, JM Financial, NOCIL, Ramkrishna Forging, Tata Metaliks, Jindal Steel etc. among others.

Majority of stocks mentioned in the list belong to the small and midcap space. It looks like mutual fund managers are testing new waters as some of the investment made are for the very first time in the year 2017.

Fund managers raised stake from 0.04 percent to 1.6 percent in HEG which has already given a return of over 1000 percent so far in the year 2017.

Similarly, Fund managers raised stake in Dilip Buildcon from 2.92 percent in the March quarter to 5.04 percent recorded in the September quarter.

We have just around three-four percent of our retail assets in mutual funds and equity. It is almost 15-20 percent for the developed markets. Provided these midcaps and smallcaps don’t mess in terms of going for badly priced acquisitions or taking some steps which are not in the right spirit of the corporate governance, they should be able to do well over the next four-five years.

Indian markets rallied in one straight line without giving investors any big opportunity to enter. The market bounced back swiftly after 3-4 percent correction; hence, plenty of money is still standing on the sidelines ready to get invested.

If there is a big correction in the market, it will be quickly bought into especially by the institution which are sitting on a big cash pile.

Retail investors have pumped in Rs 1.26 lakh crore into mutual funds in the month of November, driving industry assets under management to an all-time high of Rs 21.8 lakh crore.

With the latest inflow, total infusion in MF schemes reached Rs 3.8 lakh crore in the first eight months (April- November) of the current fiscal, latest data with Association of Mutual Funds in India (Amfi) showed.

Equity and equity-linked schemes attracted over Rs. 20,300 crore. In addition, more than Rs 7,600 crore was invested in balanced funds. Further, over Rs 9,300 crore was put in the debt funds. In contrast, gold ETFs continued to see a net outflow of Rs 89 crore.

If we look at the trend for equity schemes, MFs have poured in more than Rs 30,000 crore in the December quarter, according to data collated from Capitaline.

The amount of money going into equity schemes more than doubled in the last three years. Fund managers were pouring a little over Rs 14,000 crore in the December quarter, back in the year 2014 which has now reached well above Rs 30,000 crore in the year 2017.

Fund managers have already poured in a little over Rs 31,000 crore so far in the December quarter of 2017.

 

Inflows into domestic Mutual Funds continue to remain strong since mid-2014. Domestic flows have contributed significantly to equity investments while foreign investments, on the other hand, remained volatile. Increasing return on equity in the US may shift the flow of funds,” BofAML said in a report.

Primary issuance in India too has been strong in FY18. Further, equity issuance to the tune of USD 5 billion is expected in the near future. The supply of money will create demand and help in growing infrastructure.

Stocks in which MF have a double-digit stake:

Many small and midcap stocks in which fund managers have a double-digit stake have managed to outperform Nifty50 returns so far in the year 2017. As many as 30 out of 83 stocks have given negative return while the rest managed to outperform Nifty.

Some of the stocks in which fund managers have double-digit stake include names like Equitas Holdings, Max Financial, KNR Construction, Federal Bank, India Terrain, Repco Home Finance, HSIL, Atul, Tata Chemicals, BEML, PNC Infratech, and CG Power etc. among others.

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: 7 stocks on analysts radar today??

CLSA has maintained its buy rating on Arvind with increased target price at Rs 538 (from Rs 440 per share) but reduced FY18/19 EPS estimates by 16/2 percent.

 

Bharti Airtel

Brokerage - HSBC | Rating - Buy | Target Rs 575

While maintaining buy call on Bharti Airtel with a target price of Rs 575 per share, HSBC said it believes company's operations in Africa have further upside.

The company may be keen to unlock value in its African operations sooner rather than later, according to the research house.

HSBC estimates FY17-20 revenue CAGR at 1.4 percent and EBITDA CAGR at 11.1 percent for Africa operations.

Catalysts for Africa are improvement in revenue growth, particularly from data, it said. "The downside risk to our outlook for African operations is lower capex spend."

India remains the priority for Bharti Airtel. Company may lower Africa capex if India recovery is delayed beyond FY19, HSBC feels.

Tech Mahindra

Brokerage - Citi | Rating - Sell

Citi has maintained sell call on Tech Mahindra, saying overall margin is expected to improve over the next few quarters. At 15x FY19, the stock is not cheap, the research house said.

Tech Mahindra will continue to evaluate M&A for capability addition, it feels.

Meaningful surprises are difficult to achieve given the industry headwinds, it said.

Arvind

Brokerage - CLSA | Rating - Buy | Target Rs 538

CLSA has maintained its buy rating on Arvind with increased target price at Rs 538 (from Rs 440 per share) but reduced FY18/19 EPS estimates by 16/2 percent.

Cash flow from brands business is critical to a rerating, it said, adding value unlocking depends on Brand & Retail (B&R) business being able to fund its own growth.

CLSA sees business getting stronger both in textiles & B&R. It values the B&R business at A 22x EV/EBITDA.

SBI

Brokerage - Goldman Sachs | Rating - Buy | Target Rs 396

Goldman Sachs has upgraded SBI to buy from neutral with target price at Rs 396 per share as it feels the bank is best positioned to benefit from improving asset quality cycle.

The research house expects bank’s return on assets to improve to 0.95 percent by FY20 from 0.22 percent in first half of FY18.

It is a prime candidate to get growth capital under government's SOE recapitalisation plan, Goldman said.

Maruti Suzuki

Brokerage - Morgan Stanley | Rating - Buy | Target Rs 10,563

Morgan Stanley has overweight call on Maruti Suzuki with increased target price at Rs 10,563 (from Rs 9,102 per share).

"End-market opportunity & superior return on capital employed justifies the valuation," the research house said while maintaining forecast of 22 percent FY18-20 EPS CAGR.

Jet Airways

Brokerage - Edelweiss | Rating - Buy | Target Rs 822

Edelweiss has upgraded Jet Airways to buy from hold and raised target price to Rs 822 from Rs 548 per share as measures initiated by new CEO would turnaround company's stressed financials.

The company is focussing on sustaining growth via cost rationalisation. The strategy is to focus on cost efficiencies & debt reduction, it said.

Edelweiss raised FY18 EBITDAR margin to 16.8 percent from 15.5 percent.

Motherson Sumi Systems

Brokerage - HSBC | Rating - Buy | Target Rs 425

HSBC has maintained buy call on Motherson Sumi with increased target price at Rs 425 from Rs 376 per share as it expects innovation & cross-selling to support business growth.

It is well placed to benefit from increasing role of auto component suppliers, it feels.

With the recent fundraising, Motherson is ready for multiple acquisitions, HSBC said.

The research house said slowdown in global car market and rupee appreciation are downside risks its rating.

MORE WILL UPDATE SOON!!

Nifty likely to face resistance at 10,350: 3 stocks which can give up to 10% return?

The strong reversal trend in the Nifty index from the last two trading sessions translates to a possible breakout from its short-term hurdles placed at 10,350 level and likely to trade near 10,400 level if its holds above 10,350 level.

The Nifty index witnessed a strong comeback after trading near its crucial support level placed at 10,040 zone and managed to close above its critical 20 & 50-days EMA level.

On the daily price chart, it made a strong bullish candlestick pattern coupled with index closing above its 20 & 50-day EMA indicating a shift in sentiment.

Further, the secondary momentum indicator suggests an uptick in trend with relative strength index (RSI) entering buy zone coupled with continued uptrend momentum depicted in the trend line.

Based on the Fibonacci retracement, a major support is seen at 10,183 level followed by 10,089 level and immediate resistance will be seen at 10,350 level.

The strong reversal trend in the Nifty index from the last two trading sessions translates to a possible breakout from its short-term hurdles placed at 10,350 level and likely to trade near 10,400 level if its holds above 10,350 level.

However, it may also witness a weak support for the uptrend if it fails to close above this trend line.

Here is a list of top 4 stocks which could give up to 10% return in the short term:

Kesoram Industries: BUY| Target Rs 163| Stop-loss Rs 137 | Return 10%

Kesoram Industries witnessed a major breakout during the last week’s trade after facing consolidations near Rs119-123 level. But, the price action gave a positive outlook on the weekly chart despite closing lower from the previous level.

The strong sentiment prevailed as it witnessed a major volume breakout which enabled the stock to rally. On charts, Kesoram formed a “cup & handle” kind of a candlestick pattern along with its bullish trend pattern in its daily price chart.

Further, the secondary momentum indicator suggested a similar support for the scrip with price trading above all the level at current regime.

The MACD at 4.69 also suggests strong support for the rally with bullish crossover. Based on Fibonacci Retracement, the stock is facing a resistance at the Rs174 level and support level at Rs136.

We have a BUY recommendation for Kesoram Industries which is currently trading at Rs. 148.35

Graphite India: BUY| Target Rs 684 | Stop-loss Rs 634 | Return 4%

Graphite India witnessed a strong bullish reversal trend after consolidating at a crucial support level placed at the Rs540-555 level and continued with uptrend trajectory.

Despite witnessing a negative outlook last week, it witnessed a major breakout from higher circuit towards the weekend session. The breakout was coupled with volume support along the trend-line. The stock gained about 12 percent on the weekly basis.

On the daily price chart, the stock formed a bullish trend as it ended the weekend session on positive cues. Following a momentum indicator, which supports bullish uptrend with an increase in RSI at 67 level coupled with MACD at 19.8 showing signs of crossover from its signal-line.

Further, the stock managed to close above its 20 & 50-days EMA, and thus strengthening the positive sentiment in forward-looking session.

The stock is currently facing upper-resistance at 808-level and immediate support at 598-level. We have a BUY recommendation for Graphite India which is currently trading at Rs. 659.70

West Coast Paper Mills: BUY| Target Rs299 | Stop-loss: - Rs. 268 | Return 4%

West Coast Paper witnessed a strong uptrend momentum forming peaks on its long-term chart despite a flat movement during the initial trading session. It was further aided by growth in volumes along with its upward movement and gained about 15 percent on an intraday basis.

The scrip formed a strong bullish candlestick-pattern on its weekly price chart and continued to trade laterally on 60-degree trend line touching an upper band which indicates a positive signal.

The secondary momentum indicator further suggested a strong support for an uptrend regime with incremental in its RSI level from the previous zone along with MACD still continuing above Signal Line.

The stock is currently facing a resistance at 310 level and support level at 256. We have a BUY recommendation for West Coast Paper Mills which is currently trading at Rs. 287.20

MORE WILL UPDATE SOON!!