Big week ahead! GDP data, 700 companies’ Q4 results; here are key things to watch in stock market

 

Indian equity markets have seen volatile sessions specifically in the last one month as the fourth-quarter earnings unfolded following which investors saw PNB reporting the biggest quarterly loss by any bank ever in the Indian history. If the last one-month picture is taken into consideration, the performance of benchmark indices Sensex and Nifty have been flat. The S&P BSE Sensex moved up 211 points or 0.6% to 34,925 from a level of 34,714 as on 26 April 2018 while, on the other hand, wider Nifty 50 index 12.65 points or 0.12% to 10,605.15 from a level of 10,617.8.

Going ahead in the next week, the domestic markets are likely to steered by upcoming Q4 earnings with over 700 companies set to report their respective fourth-quarter financial report card, GDP data for the period of January-March 2018, crude oil prices and rupee value against US dollar and settlement of India dated securities amounting to not more than Rs 12,000 crore auctioned by RBI.

Among the 700-plus companies which are scheduled to announce Q4 results in the week ahead, major firms are NTPC, Oil India, Dredging Corporation of India, Lanco Infratech, Ruchi Soya, NHPC, Bank of India, Indian Overseas Bank, Piramal Enterprises, Minda Corp, Hathaway Digital, NLC India, Walchandnagar Industries, United Bank of India, Aurobindo Pharma, NMDC, Coal India, Dilip Buildcon, MMTC, Dish TV, BHEL, Bharat Electronics, Ashoka Buildcon, Glenmark Pharma, Gati, BPCL, Simbhaoli Sugars, La Opala RG, Bharat Dynamics, Mishra Dhatu Nigam, Manpasand Beverages, Canara Bank, HDIL, Hindustan Copper, Fortis Healthcare, Punj Lloyd, ONGC, berger Paints, Infibeam Incorporation, GMR Infra, The Jammu & Kashmir Bank,Religare Enterprises, Torrent Pharma, Suzlon Energy, Rajesh Exports and Hindustan Aeronautics.

The settlement of RBI’s Rs 12,000 crore auction of India dated securities will take place on 28 May. The move is likely to see a spike in demand of rupee which may result in appreciation of the domestic currency against the US dollar. The Indian Rupee logged the biggest single-day gain on Friday surging as much as 56 paise apiece US dollar. Crude oil prices have fallen for three straight sessions with Brent crude slipping below $77 per barrel mark after it breached $80 level in the last week. India’s GDP data for the fourth quarter of the financial year will be announced on 31 May 2018.

MORE WILL UPDATE SOON!!

Foreign Investors Withdraw $4 Billion In May On A Rise In Crude Price

  

Foreign investors have pulled out a massive $4 billion (over Rs 26,700 crore) from capital markets so far this month, primarily due to a surge in global crude prices.

This comes after such investors had taken out more than Rs 15,500 crore from capital markets (equity and debt) in April, the steepest outflow in 16 months.

Foreign portfolio investors (FPIs) withdrew a net sum of Rs 7,819 crore from equities and another Rs 18,950 crore from the debt market during May 2-25, taking the total outflow to Rs 26,769 crore ($ 4 billion), according to the latest depository data.

Harsh Jain, chief operating officer at Groww, an investment platform, attributed the latest outflow mainly to a rise in cost of crude oil prices. This would impact all the oil-importing economies, including India, and adversely affect its current account deficit, fiscal deficit, imported inflation and create headwind for economic growth.

Besides, investors were cautious after U.S. President Donald Trump cancelled a planned meeting with North Korean leader Kim Jong Un and threatened to impose tariffs on auto imports. FPIs had started profit-booking before the Karnataka elections, a crucial indicator for the 2019 general elections results, he said.

“Another discomfort among the FPI (Category III) was the Securities and Exchange Board of India’s requirement for additional documents from key people in such a fund. Their concern is around the privacy and data theft,” Jain said.

So far this year, FPIs have put in just Rs 641 crore in equities and withdrew nearly Rs 30,000 crore from the debt market.

MORE WILL UPDATE SOON!!

Nifty to consolidate in expiry week; 3 stocks which could give 9-11% return in 1 month

We believe the markets will see a consolidation in the range of 10,500 to 10,730 levels over the next week.

 

We believe that the markets will see a consolidation in the range of 10,500 to 10,730 levels over the next week, and there could be volatility with respect to rollover movements in individual sectors/stocks and quarterly result.

Nifty 50 closed the week with marginal week-on-week gain of 10 points, and closed marginally above its crucial resistance level of 10,600-level.

The index recovered from the lows of 10,418 with broad-based positive momentum across sectors and the stocks in the last two days of the week.

The Nifty withhold the support levels of 10,440 (50 percent Fibonacci retracement of prior up-move from 9,952, to 10,929 levels).

We believe that the markets will see a consolidation in the range of 10,500 to 10,730 levels over the next week. Yes, there could be volatility with respect to rollover movements in The entire macro scenario is changing especially with respect to higher crude oil prices and weakness of rupee against Greenback.

We are witnessing stocks from energy, automobiles, cement and midcaps space which is hitting fresh lows and the correction is pretty sharp compared to the broader markets.

Defensive sectors like FMCG and IT are scaling fresh 52-week high in the current month. We would rather suggest booking profit albeit partially, in outperforming sectors.

Investors can also look to invest in beaten-down sectors/stocks, as they will converge over the next few months once the crude prices settle down in the near-term.individual sectors/stocks and quarterly results.

Declining by 7.4 percent and 6.9 percent on a month-to-date (MTD) basis, midcap and smallcap indices are trading below their long-term 200-day average, which offers an opportunity for the investors to accumulate high-quality midcap stocks at regular intervals to build a strong diversified medium-term portfolio.

Top 3-5 positional call which could give handsome returns to investors in next 1 month?

A) Here is a list of top three stocks which could give up to 11 percent return in the next 1 month:

Capital First (CMP: 557): Buy | Target: Rs 620 | Stop loss: Rs 535 | Return: 11%

The stock has retraced 61.8 percent 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 eight 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 two 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 10-day closing high. 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.

MORE WILL UPDATE SOON!!

Mood of the Nation survey: Key takeaways

If the polls were to be held today, BJP’s vote share would come down to 35 percent, UPA could get 12 percent votes while other parties (including SP and Mayawati-led Bahujan Samaj Party) would together account for 46 percent.

  

With the 2019 Lok Sabha elections less than a year away, both BJP and the Congress have sounded the poll bugle and are leaving no stone unturned.

Prime Minister Narendra Modi continues to lead the saffron party from the front while Congress President Rahul Gandhi has announced his prime ministerial ambitions.

According to the Lokniti-CSDS-ABP News ‘Mood of the Nation Survey’ (round three) released on Thursday, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government is likely to return to power if the polls are held today, however, with a wafer-thin margin.

The BJP would not get a majority on its own and will have to depend on its allies to retain power, the survey suggests.

Here are some of the key takeaways from the ‘Mood of the Nation’ survey:

BJP may not get majority on its own

The survey suggests that if the elections were to be held today, the BJP would not be achieve the 272-seat magic number. It would have to rely on its allies to retain power at the Centre.

NDA would get 274 seats while the UPA would win 164 seats. Other parties and regional parties would get 105 seats, the survey has suggested.

In terms of the nationwide vote share, NDA would get 37 percent votes, down from 38.5 percent in 2014. UPA would get 31 percent votes, up from 23 percent, while others would get 32 percent votes.

BJP makes loses in Uttar Pradesh

Out of the 80 Lok Sabha seats in the state — the highest for any state in the country — the saffron party had bagged 71 seats. Akhilesh Yadav-led Samajwadi Party (SP) had won five seats while Congress and Apna Dal (NDA member) bagged two seats each.

NDA’s vote share in 2014 in UP was 43 percent while UPA’s vote share was eight percent. Other parties put together, had received 49 percent votes.

However, if the polls were to be held today, BJP’s vote share would come down to 35 percent, UPA could get 12 percent votes while other parties (including SP and Mayawati-led Bahujan Samaj Party) would together account for 46 percent.

BJP’s performance dips in southern India

Out of 132 seats in southern India, the NDA is likely to win just 18-22 seats while the UPA could bag 67-75 seats, according to the survey. Other players and region parties could win 38-44 seats, if the polls were to be held today.

In 2014, NDA had bagged 2 seats in the region, UPA had won 21 seats while other parties had clinched 88 seats.

BJP makes gains in Bihar, Eastern India

The survey has revealed that the NDA would maintain its numbers in the state of Bihar. The NDA is likely to have a 60 percent vote share, far ahead of UPA’s 34 percent. Other parties would have a six percent vote share, if the polls were held today.

In 2014, NDA had a vote share of 58 percent followed by UPA’s 28 percent. Others had bagged a vote share of 21 percent in the previous general election.

In July 2017, Nitish Kumar, Chief Minister of Bihar, resigned from his post and broke his party's 'Grand Alliance' with Lalu Prasad Yadav's Rashtriya Janata Dal (RJD) and Congress.

Nitish was sworn in as the new Chief Minister less than 24 hours after he resigned, but this time with the support of the BJP.

The survey has also suggested that the NDA’s popularity has remained intact in the east. If Lok Sabha polls were to be held today, NDA is likely to get 86-94 seats out of 142 seats. The UPA would get 22-26 seats while others parties would bag 26-30 seats.

In 2014, NDA had won clinched 58 seats in the region, UPA had won 21 while others bagged 63. East India here includes Bihar, West Bengal, Odisha, Jharkhand and Assam.

In West Bengal, chief minister Mamata Banerjee-led Trinamool Congress is expected to hold onto the state if polls were held today. TMC is likely to get 44 percent vote share, followed by BJP’s 24 percent, Left parties’ 17 percent and Congress’ 11 percent.

Congress leads in Rajasthan, MP with clear margin

If the Assembly elections in the states of Rajasthan and Madhya Pradesh were to be held today, the Congress party could trump the BJP in both states.

The BJP is lagging behind in Rajasthan by a 5 percent vote share. Congress is likely to bag 44 percent vote share, followed by BJP’s 39 percent, according to the survey.

In Madhya Pradesh too, where Chief Minister Shivraj Singh Chauhan is fighting the anti-incumbency factor, the Congress is maintaining a comfortable margin of 15 percent vote share over the BJP.

Congress is likely to get a 49 percent vote share while the BJP could come second with 34 percent votes, if elections were to happen today.

Rahul Gandhi’s popularity rises, PM Modi’s dips

Around 24 percent of the people who were surveyed preferred Congress president Rahul Gandhi as the prime minister. PM Modi however, retained his lead being the preference of 34 percent of the respondents.

The popularity gap between the two leaders has come down to 10 percent from what was 17 percent five months ago, according to the second round of the survey.

According to the survey, almost 47 percent of the total 15,859 respondents are of the opinion that the Modi government does not deserve to be voted back to power in 2019. Less than two of every five respondents or 39 percent people thought it deserved a second chance, with the rest remained non-committal.

MORE WILL UPDATE SOON!!

Technical View: Nifty 50 forms a bullish candle; 10,524 crucial for bulls in the coming week

India VIX fell down up by 4.46 percent at 12.55 levels. On the options front, maximum Put OI is intact at 10,500 followed by 10,400 strikes while maximum Call OI is placed at 10,800 followed by 11,000 strikes.

  

Bulls charged on D-Street from the word go as they helped Nifty50 to climb 10,550 as well as 10,600 levels on closing basis. The index which made a bullish candle on the daily charts formed a Hammer-like pattern (not exact) on the weekly charts.

The Nifty50 is now trading above its crucial short-term moving averages and today’s intraday low of 10,524 will be of big importance in the coming week, suggest experts. A break below this level could again put further pressure on the index amid expiry week volatility.

On the upside, the next target for the index is placed at 10,733 levels but bulls will be able to take full control of the index if it surpasses 10,929 which was recorded on May 15, 2018.

The Nifty50 which opened at 10,533 slipped marginally to hit an intraday low of 10,524. Bulls took control of the index and pushed Nifty above 10,600 to hit an intraday high of 10,628 before closing the day at 10,605, up 91 points.

It was heartening to see bullish Hammer formation on weekly charts as markets recouped 100 percent of the losses witnessed in the first three sessions of the week with back to back strong bullish candles of last two sessions. This V-shaped recovery on an accelerated path, after hitting a low of 10,417, is raising hopes of a bottom around 10,417 levels.

Though, it will be too early to conclude that bottom is in place at recent low but the same will be confirmed if Nifty50 get past 10,929 by next 4 sessions which also coincides with current month expiry.

Mohammad further added that traders are advised to take a cautious stance if Nifty slips below 10,524 levels in next 2 sessions. On oscillators front, MACD shied away with an uptick from its equilibrium line on daily charts and this kind of behaviour is usually regarded as a strong bullish sign. The current upmove can initially expect to get extended up to 10,733 levels.

India VIX fell down up by 4.46 percent at 12.55 levels. On the options front, maximum Put OI is intact at 10,500 followed by 10,400 strikes while maximum Call OI is placed at 10,800 followed by 11,000 strikes.

Meaningful Put writing is placed at 10,600 and 10,500 strikes which could act as a strong support while Call unwinding is seen at immediate strike prices which give room for further upside.

Options data suggests a shift in a trading range between 10,500 and 10,700 zones. The Nifty index opened flattish and witnessed sustained buying throughout the trading session. It formed a Big Bullish Candle on daily scale followed by Dragon Fly Doji on a weekly scale which suggests buying is visible at lower levels in the market.

Now, till it holds above 10,550, it could extend its gains towards 10,680 and then towards 10,725 zones, while on the downside supports are seen at 10,550 and then towards 10,500 levels.

MORE WILL UPDATE SOON!!

Sun Pharma Q4 profit up 7% YoY at Rs 1,309 crore, beats estimates

Revenues declined 1.11 percent to Rs 7279.9 crore in Q4 on YoY basis but came above analyst estimate of Rs 6,778.8 crore.

  

India’s largest drugmaker Sun Pharmaceutical's consolidated net profit rose 6.94 percent year-on-year (YoY) to Rs 1,309 crore in the fourth quarter ended March, beating analysts' estimates.

Consolidated revenue for the quarter declined 1.11 percent YoY to Rs 7,279.9  crore in Q4 but was above analyst estimate of Rs 6,778.8 crore.

Consolidated EBITDA margin stood at 24.1 percent in Q4FY18.

A Reuters poll had forecast a drop in net profit to Rs 947.4 crore. It estimated a revenue decline of 0.68 percent YoY to 6,778.8 crore.

The company declared a dividend of Rs 2 per equity share of Re 1.

The results were announced after market hours.

Shares of Sun Pharma rose 0.97 percent to close at Rs 466.55 on BSE, the benchmark Sensex gained 0.78 percent to 34,924.87 points.

MORE WILL UPDATE SOON!!

These 38 multibaggers stocks rose up to 600% in 4 years; do you own any?

Since 2014, midcaps have faced three large round of corrections in January 2016, November 2016 and May 2017. In the current round, midcaps have already retraced 14 percent from the top, puncturing the bull cycle.

Midcap stocks surged in 2014 after Prime Minister Narendra Modi assumed office on 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.

But if you joined the rally late, there are chances that your portfolio might still be bleeding. 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.

In October last year, the regulator issued a circular directing mutual funds to group their equity schemes under large, mid and smallcap categories based on the market capitalisation of stocks the scheme have invested in.

Sebi’s reclassification is aimed at simplifying the life of a mutual fund investor by rationalising the number of schemes available in the market and also re-categorising the same. The will enable the investor to differentiate between schemes as per his/her goals and risk appetite, with relative ease and without much confusion.

“The reason why Sebi reclassification is leading to a sell-off in midcaps and smallcaps is because many largecap funds had a proportionately greater exposure to these with the aim of outperforming the benchmark index: 

  

If we look at the losers, there are stocks that have lost up to 90 percent of their value in the last four years. As many as 21 stocks in the BSE Midcap index posted negative returns since the Modi government came to power in 2014. These include: Reliance Communications (down 90 percent), Bank of India (down 70 percent), Adani Power (down 65 percent) and Reliance Power (down 65 percent).

What should investors do with these midcaps?

Since 2014, midcaps have faced three large round of corrections in January 2016, November 2016 and May 2017. In the current round, midcaps have already retraced 14 percent from the top, puncturing the bull cycle.

Despite India’s macro story taking a hit due to falling rupee against the dollar and higher crude oil prices there is a higher likelihood of bottom-fishing happening in the short-term. Hence, experts advise investors to be cautious while picking stocks.

It is imperative that an investor re-assesses the portfolio at periodic intervals to weed out stocks which do not fit various fundamental criteria. While a considerable premium valuation may warrant at least a partial profit-booking in the stock, the mere fact that it has been a multi-bagger is not the most appropriate argument to exit a stock.

Investors concerned about rich valuations can focus on companies in the largecap domain or stocks that turned largecap, experts said.

Midcaps are still trading at premium valuations as compared to largecaps. If investors are not ready to hold the stock for 3-4 years, then they should exit from the winners which have given multi-bagger returns.

She lists Tata Consultancy Services (TCS), Yes Bank, Bajaj Finance and Bajaj Finserve as some of the stocks which have grown from midcaps to largecaps over a period of time. These stocks continue to perform and have delivered multibagger returns to clients.

From the above table, she recommends quality stocks like Jubilant FoodWorks, Westlife Development, Parag Milk, Gujarat Narmada Valley Fertilisers & Chemicals and Dewan Housing Finance Corporation which have not corrected despite the broader index correction.

MORE WILL UPDATE SOON!!

See Nifty at fresh record high in FY19; 'quality stocks' available post correction

Number of quality stocks have become attractive after the recent correction and these can be value investments.

 

Given the worsening macro scenario and likely inflationary pressure in ensuing months, led by higher oil prices, premium valuations are completely dependent upon the earnings trajectory of companies. A look at 27 companies forming part of the Nifty (excluding banks) shows that adjusted earnings have improved by around 12 percent year-on-year (YoY) as against expectations of 15-20 percent growth. The management commentary of companies has been encouraging as volume growth was robust across sectors. Hence, earnings growth can potentially improve further in coming quarters, which may lead to sustainable premium valuations. The market may also be supported by a persistent flow of domestic liquidity into equity mutual funds. We foresee earnings growth to be in the 15-20 percent range in FY19.

 It is difficult to predict crude oil prices in the near-term. However, there is an upward price bias in the short-term due to supply pressures owing to the recent sanctions in Iran imposed by the US and ongoing production discipline between the Organisation of the Petroleum Exporting Countries (Opec) and Russia. We are hopeful that prices should reverse to $70/bbl levels in the medium-term as higher oil prices tend to impact global economic growth, which ultimately hampers oil demand. Consistent increase in oil rigs in the US (US oil production surpassed 11 million barrels per day) along with the likely breach of production discipline by Opec members at high prices may support oil prices to reverse going forward.

Higher oil prices will certainly impact India’s twin deficit as we import around 80 percent of our total oil requirement. India’s oil import bill for April stood at $10.4 billion (up 41.5 percent YoY). If we extrapolate this figure, India’s oil bill for FY19 is likely to be around $120-125 billion as against $87 billion in FY17. Hence, this incremental bill is certain to have major ramifications on our fiscal deficit, which can also hurt economic growth to an extent.

Nifty is hardly 500 points away from its last all-time high hit in January. Hence, surpass of that level cannot be ruled out given the earnings recovery of companies. We will have two elections in Rajasthan and Madhya Pradesh in second half of 2018. A positive outcome in favour of the National Democratic Alliance (NDA) with a stabilisation in oil prices can augur well for the market.

Given the fact that the upcoming elections in MP and Rajasthan are NDA governed states, it will probably give some indication about the electorate’s mood ahead of general election in 2019. At present, the NDA is ruling in over 20 states. Hence, the outcome of these two states will be taken as an indicator of the likely outcome of general election in 2019.

 Around 40 Nifty companies have reported their Q4 FY18 earnings so far. Excluding banks, 27 companies have reported average earnings growth of around 12 percent, which is certainly lower than our expectations. Considering the management commentary of companies, we foresee earnings recovery in FY19 is to be better than FY18. We expect 15-20 percent earnings growth in FY19.

After the Reserve Bank’s circular regarding recognition of NPAs in February, all banks have reported higher-than-normal slippages in the March quarter. We don’t expect a major upward move in slippages in FY19 as almost all categories of bad assets have now been reported in NPAs.

FY19 will be a year of quality stocks, irrespective of their market capitalisation. Most midcaps and smallcaps have delivered very high returns over the last 2-3 years without much earnings support. The recent correction in midcaps and smallcaps is a consequence of high valuations without earnings growth. Many quality stocks have become attractive after the recent correction and these can be value investments from hereon.

A retail investor should first create an asset allocation plan. If someone has an investment horizon of 10 years, investments in equities should be an integral part of that plan. At a young age, more capital should be allocated to equities for investing on a regular basis. In India, equities have delivered more than 12 percent yearly returns for the last 15 months. In a growing country, where per capita income is still a fraction of the developed world average, equities will keep providing better returns. Therefore, the road to riches goes through equity but it requires patience to practice it.

The shift from offline to online trading, growing prominence of mobile among online platforms, and emergence of data science are some key changes. This has resulted in the investing community taking informed decisions. The focus of brokers is no more partial to equity broking, but shifting to emerging asset classes like mutual funds and insurance.The impact of these changes on the mobile platform has evolved from just being the core for facilitating trades on the go, it now imparts information and provides access to transact across MFs and insurance solutions.

MORE WILL UPDATE SOON!!

Crude oil, rupee, earnings to dictate market trend; these 10 stocks can give 28-94% returns

Higher crude oil prices and the rupee’s weakness will continue to dampen sentiment putting pressure on the fiscal deficit and bond yields in the short term.

  

Nifty, which continued to correct on Monday, has fallen nearly 4 percent from its three-month high of 10,900 that it hit earlier this month.

Rising crude oil prices, weaker rupee, weak corporate earnings and the political uncertainty in Karnataka dented the market sentiment.

Experts believe the consolidation is likely to continue for a while as investors will closely monitor the movement of oil prices and rupee, and the remaining corporate earnings.

We expect the Indian markets to remain rangebound in the coming sessions. Further course of market would be dictated by global developments, crude oil price and currency movement in near term.

However, stock-specific volatility would continue with on-going corporate earnings season, he feels. "We would advise investors to accumulate quality companies on dips."

Vikas Jain, Senior Research Analyst, Reliance Securities also said one would have to be very selective in the approach towards individual stocks from the current levels as lot of macros are changing with respect to higher crude prices and rupee weakness against the greenback.

Higher crude oil prices and the rupee’s weakness will continue to act as dampener putting lot of pressure on the fiscal deficit and bond yields in the short term, he feels.

Here is the list of top 10 stocks that can return between 28 percent and 94 percent in 10-24 months period:

Aurobindo Pharma: Buy | Target - Rs 909 | Return - 61%

Aurobindo received VAI status from USFDA post the company's adequate address of the concerns on the Bhiwadi plant. The assigned status by USFDA is positive development for ARBP as the status implies that the plant is unlikely to receive warning letter.

ARBP filed ANDAs on four Penems from the plant and currently supplies only Meropenem (market size: $98 million) to US and multiple Penems to emerging markets. There are three Penems of ARBP are under review including Doripenem (market size: $2 million), Ertapenem (market size: $383 million) and Imipenem/Cilastatin (market size: $18 million).

With Apotex recalled 36 lots of Tazo-Pip (3.375gm and 4.5gm/vial) in US due to elevated levels of impurities, there could be a possibility of Aurobindo to boost its Rx share in Tazo-Pip in near to medium term. While the recalled lot size is too small to assume market share expansion in near term, the ongoing organisational disarray in Apotex (promoted died with no heir apparent, CEO resigned with no captain in the ship) may led to the lower supply from Apotex or regulatory scanning from USFDA due to lingering of the issue.

Currently, Aurobindo produces Tazo-pip from Unit-12 and newly inducted Unit-16. Aurobindo received revenues of $22 million from Tazo-Pip in FY17 and expected to have revenues of $30 million in FY18E. While it will be too early to discount the possibility in earnings estimates, Aurobindo's 9 percent Rx share in Tazo-Pip may gain from 16 percent Rx share of Apotex going forward. We maintain Buy and retain target price at Rs 909.

UltraTech Cement: Buy | Target - Rs 4,989 | Return - 29%

UltraTech Cement has announced it will be acquiring the cement business of Century Textiles in a share swap deal.

In the near term, the deal will depress UltraTech margin, as its EBITDA per tonne is Rs 970 in FY18 versus Century Textiles’ Rs 445 (blended, including clinker volume). As Century Textiles’ cement book value is low (net block of Rs 2,400 crore, i.e., $27), depreciation burden is likely to be less. Thus, the deal would be EPS-accretive.

Our analysis indicates the deal could add Rs 5.5 to EPS by FY21E, i.e., the second year after completion of acquisition (we assume savings of 10 percent in fixed cost, 6 percent reduction in freight cost, reduction in cost of debt by 75bp and transfer fees of Rs 64 per tonne with a volume CAGR of 7 percent over FY18-21E).

After factoring in the acquisition in FY20 numbers (the first year), we upgrade EPS by 1 percent and target price by 2 percent to Rs 4,988. We upgrade rating to Buy from Accumulate due to 7 percent price correction since 25-Apr-2018.

Birla Corporation: Buy | Target - Rs 1,100 | Return - 51%

We believe the company will gain pricing power in the central region, accounting for 56 percent of overall capacity on limited capacity additions.

Cost structure also is expected to improve, as the company will be reducing the purchase of power from the grid in Reliance Cement (RCCPL) by installing a waste heat recovery system (WHRS) and use of alternative fuels.

Apart from this, a strong pipeline of capacity addition would ensure it will grow faster than the industry. Thus, we reiterate Buy rating on the stock with a revised price target of Rs 1,100 from Rs 1,229 based on enterprise value per tonne of USD 110 on FY20E capacity.

JBM Auto: Buy | Target - Rs 560 | Return - 45%

We believe, JBM Auto's core sheet metal business (body-in-white and chassis) will continue to deliver strong earing growth helped by 1) Accelerated growth in passenger vehicle's segment, 2) Increasing revenue from Ford, Tata Motors, M&M, RE, HMSI and VECV, 3) benefits of operating leverage.

Also, strong order book of tooling division business will boost margin and profitability. Moreover, proposed amalgamation of its subsidiary JBMAS and JV JBMMA into a single entity will be synergetic and EPS accretive.

We reckon 35 percent PAT CAGR over FY18-FY20E; fuelled by improving operating leverage, richer product mix and acquisition of new clients. We value stock at Rs 560 (18x FY20E EPS) and maintain Buy.

KEI Industries: Buy | Target - Rs 580 | Return - 29%

KEI Industries posted strong turnkey revenue, leading to 17 percent revenue beat in Q4FY18. Bottomline also surpassed estimate around 30 percent. Key

highlights: a) Q4 & FY18 cables volume grew around 18 percent—reasonable in light of tepid housing demand—attributable to KEI’s diversified business, & is better than peers; and b) exports (up 21 percent YoY) & extra high voltage (EHV; up 65 percent YoY) helped KEI outpace peers, driving overall utilisation above 90 percent.

We revise up FY19/20E EPS 4/6 percent factoring in higher growth. We believe, strong return on capital employed (RoCE) and earnings spurt will be complemented by rising B2C traction driving free cash flow over FY18-20. Maintain Buy with revised target price of Rs 580 (Rs 550 earlier).

Dollar Industries: Buy | Target - Rs 656 | Return - 66%

Stewart & Mackerch Research iniates coverage on Dollar Industries (DIL) with a strong Buy rating.

It has a wide range of men's, women's and kids' innerwear. It has been given the status of an “export house” by the government of India.

On the back of favorable policies by the government towards development of businesses in India coupled with aggressive organic and inorganic growth, Dollar Industries is expecng a healthy growth of 15-20 percent per year for a period of 5 years. Aggressive brand building exercises would lead to the Company accruing 15 percent EBITDA in a period of next 3 years.

Internet penetration and urbanisation are the key areas which Dollar Industries is targeting in order to carve out a market share in the premium and super-premium segments with the help of e-commerce, modern outlets, and EBO models. The company is radically trying to change the way it operates by transforming itself to a value-driven, innovation inspired, asset light and brand powered company.

We assign a P/E(x) multiple of 36.10 on FY20E EPS, to arrive at a target price of Rs 656.

Brokerage: SMC

ONGC: Buy | Target - Rs 261 | Return - 41%

The company achieved good performance during Q3FY18 and management expects demand for crude oil would continue to rise from the strong consumption growth in petroleum products and prices are expected to firm up sharply.

It is expected exploring and other activities would get benefit from free pricing, strong demand and stabilising capacity additions, thus we expect the stock to see a price target of Rs 261 in 8 to 10 months time frame on a target expected P/E of 11x and FY19 (E) earnings of Rs 23.75.

Tata Chemicals: Buy | Target - Rs 941 | Return - 28%

The company’s cash-cow business – soda ash and sodium bicarbonate – has been performing well across geographies. Apart from that, the company has begun focusing on growing other segments, as evident from the launch of new products under pulses and expected commissioning of the HDS plant in FY19 and of the nutraceuticals plant in 1HFY20.

We largely maintain estimates, and expect Tata Chemicals to deliver 10 percent revenue CAGR and 7 percent PAT CAGR over FY18-20E. We value Tata Chemicals on an SOTP basis to arrive at a target price of Rs 941. Maintain Buy.

Suven Life Sciences: Buy | Target - Rs 350 | Return - 94%

Analysis indicates company’s earnings have reached a sustainable base and will continue to improve on this base going ahead. We expect the core CRAMS base (Core CRAMs around 13 percent CAGR FY14-18) coupled with the commercial/pre-commercial supplies that have started ramping up company is on better earning trajectory.

One more molecule addition to commercial phase further enhances FY20E earnings outlook. However, FY19E consolidated number would see higher R&D spend as the SUVN 502 phase II trials are expected to conclude (remaining R&D spend of $10 million would be spilled over FY19E and FY20E, which larger portion in FY19E.

With one of the best management with a focus on NCE development, this investment adds a huge option value from its current NCE pipeline called SUVN 502 (in Phase II A, trials ongoing). We have a Buy rating with to 20xFY20E EPS, resulting in target price of Rs 350.

Newgen Software Technologies: Buy | Target - Rs 500 | Return - 94%

Newgen Software Technologies is a software products company offering a platform that enables organizations to rapidly develop powerful applications addressing strategic business needs.

Newgen is currently trading at 22.9x FY18 P/E, which is reasonable in our view, given strong growth prospects. It has healthy balance sheet & scalable business model. Company continues to strengthen the horizontal product platform with vertical service accelerators.

We strongly believe Newgen can drive innovation and adopting solutions in line with rapidly evolving technological trends. Considering the above, along with the growth drivers; we recommend a strong Buy to investors with a target price of Rs 500 with duration of 18-24 months.

MORE WILL UPDATE SOON!!

Time to sell Nifty in range of 10,500-10,600; next target placed at 10,325

Considering the technical and derivative evidence discussed above, we believe that the trend of the Nifty has turned bearish for the short term.

   

The Nifty50 has been falling for the last 5 straight sessions with a total fall of 423 odd points from the recent high of 10,929, registered on 15th May 2018.

After forming a bearish “Gravestone Doji” candlestick pattern on the daily charts on 15th May 2018, Nifty has now breached the crucial support of its 20-days and 50-days EMA, to close at 10,516 on Monday.

In the previous week, Nifty formed bearish “Engulfing pattern” on the weekly charts. This bearish pattern is now confirmed, as Nifty witnessed a follow-up selling during the first session of this week.

The relative strength index or the RSI oscillator has formed a negative divergence and has reached below the benchmark level of 50 on the daily charts of Nifty, indicating a negative trend.

MACD indicator has shown negative crossover on the daily charts. The Nifty has also closed below the previous bottom on the daily chart.

The next support for the Nifty is seen at 10,440 and 10,325, which happens to be 50 percent and 61.8 percent retracements of the entire upswing seen from 9,951 (23rd Mar 2018 bottom) and 10,929 (15th May 2018 Top).

From the Derivative perspective:

During the last week, long unwinding is seen in the Nifty and Bank Nifty Futures’ where Open Interest in the Nifty and Bank Nifty fell by 2 percent and 9 percent with Nifty and Bank Nifty falling by 2 percent each.

The Nifty open interest Put call ratio (PCR) has fallen to 1.30 levels from 1.66 levels seen a few days back. This fall in the Nifty Open Interest Put call ratio is largely on the back of Call writing at 10,600-10,700 level.

On the higher side, Nifty is likely to find immediate support in the vicinity of 10,450-10,500 level, where Puts have been written earlier.

Foreign institutional investors (FIIs) created fresh shorts in the Index Futures’ segment during the last week, where they net sold contracts worth Rs 1,240 crore with open interest going up by 38,675 contracts.

In the Stock Futures’ segment too, FII created fresh short positions in the stock Futures’ segment where they net sold contracts worth Rs 908 crore with open interest going up by 48,987 contracts.

In the Option segment too, FIIs net bought 41,840 contracts of Index Puts and sold 13,281 contracts of the Index Calls, suggesting they are creating bearish positions in the Index Option segment too.

Considering the technical and derivative evidence discussed above, we believe that the trend of the Nifty has turned bearish for the short term.

We advise traders to remain short and utilize any pullback in Nifty to create fresh short positions. The ideal range of shorting Nifty would be 10,550-10,600. Targets for the Nifty short are seen at 10,440 and 10,325 and keeping a stop loss above 10,700 on a closing basis.

Here is a list of top three stocks which could give up to 9.5% return in the short term:

Wipro: Sell| Target: Rs 245 | Stop-loss: Rs 280 | Return 7.5%

Despite being a part of the IT sector which is clearly outperforming in the current market scenario, Wipro has failed to perform and is weakening further on the charts.

On the weekly charts, the stock has confirmed a breakdown from the bearish head and shoulder pattern. The stock is currently trading below its 50, 100 and 200-DMA, indicating a bearish trend on all time frames.

The stock price has been forming lower tops and lower bottoms on the daily charts. We recommend selling Wipro for the downside target of Rs 245, and keeping a stop loss above Rs 280.

Apollo Hospitals: Sell| Target: Rs 890 | Stop-loss: Rs 1,050 | Return 9.5%

The pharma and healthcare sector has been underperforming for the last 3 years and the Nifty Pharma index has reached its new 52-week low recently.

Apollo Hospitals has also been showing weakness on the short to medium term charts. On the weekly charts, the stock has confirmed breakdown from its bearish head and shoulder pattern.

The stock is currently trading below 50, 100 and 200-DMA, indicating a bearish trend on all time frames. Oscillators like RSI, MACD, and DMI have been showing weakness on the charts.

We recommend selling Apollo Hospitals for the downside target of Rs 890, and keeping a stop loss above Rs 1,050.

Bharti Airtel: Sell| Target: Rs335 | Stop-loss: Rs 380 | Return 7%

Telecom sector has been struggling for the last many years and the underperformance is likely to continue in the coming times also.

The stock price has recently breached the crucial support of double bottom placed at Rs 375 on the daily charts. On the weekly charts, the stock has confirmed breakdown from the bearish head and shoulder pattern.

The stock is currently trading below 50, 100 and 200-DMA, indicating a bearish trend on all time frames. Bearish Death crossover setup was witnessed recently on the charts, as 50 and 100 DMA reached below 200-DMA.

Oscillators like RSI, MACD, and DMI have been showing weakness on the charts. We recommend selling Bharti Airtel for the downside target of 335 and keeping a stop loss above Rs 380.

MORE WILL UPDATE SOON!!