Sensex up 139 pts, Nifty fails to hold 10,200 on caution ahead of Fed meet outcome

Benchmark indices closed higher but were off day's high, with investors looking cautious ahead of the outcome of Federal Reserve's March policy meeting due later in the day.

 

HDFC Group stocks and Reliance Industries helped the market close higher but the selling pressure in ICICI Bank and Tata Stocks capped upside.

The 30-share BSE Sensex shed more than 200 points from day's high to close at 33,136.18, up 139.42 points while the Nifty 50-share NSE Nifty failed to hold the 10,200-mark, rising 30.90 points to 10,155.30.

All eyes are on the outcome of two-day US Federal Reserve's policy meeting that is scheduled to be announced tonight. Globally investors expect first rate hike of the year from the central bank but new Fed Chairman Jerome Powell's commentary on future rate hikes will also be closely watched.

Most Asian markets ended lower and European markets were also trading weak as investors awaited a likely hike in US interest rates later in the day.

Asian markets like Japan's Nikkei, China's Shanghai Composite and Hong Kong's Hang Seng were down around 0.3-0.5 percent. France CAC, Germany DAX and Britain FTSE were down 0.3 percent each at the time of writing this article.

Back home, the broader markets also closed off day's high, with the Nifty Midcap index gaining 0.4 percent and BSE Smallcap index rising 0.3 percent while the market breadth turned in favour of declines.

About 1,404 shares declined against 1,272 advancing shares at close against four shares advanced for every share falling in morning on the BSE.

On the stock front, Bharti Airtel was the biggest gainer among Nifty50 stocks after global brokerage firm Goldman Sachs has reiterated its Buy rating on the stock & added it to the conviction list as the risk-reward appears attractive. We see 35 percent potential upside in our base case against 9 percent downside in bear case.

Nifty Bank index lost more than 200 points from day's high to close 87 points higher while PSU Bank index ended flat after rising as much as 2.2 percent in morning.

HDFC Bank, HDFC, Bajaj Finance, Reliance Industries, L&T, Maruti Suzuki and Axis Bank gained up to 3 percent whereas ICICI Bank, Tata Motors, IOC, Eicher Motors, Tata Steel and Adani Ports declined up to 2 percent.

Apart from Nifty50 stocks, JK Lakshmi Cement, VIP Industries, Shoppers Stop, IDBI Bank, DHFL, M&M Financial, Jubilant Foodworks, PNB Housing Finance, BEML, Radico Khaitan, United Spirits, Oberoi Realty, Indiabulls Real Estate, and Balrampur Chini gained up to 9 percent.

Binani Industries, United Breweries, HCC and PC Jeweller fell up to 6 percent.

MORE WILL UPDATE SOON!!

Technical View: Nifty forms ‘Spinning Top’ kind of pattern; US Fed outcome eyed

Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.

  

The Nifty which started on a positive note failed to keep the momentum going and closed below its crucial 200-days exponential moving average (DEMA) for the second day in a row. It formed a small-bodied candle which closely resembles a ‘Spinning Top’ kind of indecisive pattern.

Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.

The Nifty index opened gap up and negated its formation of lower highs - lower lows of the last four trading session. It came under selling pressure in afternoon trade and pulled the index below 200-DEMA placed around 10165, and 5-DEMA which was placed at 10,185.

Investors are advised to tread with caution ahead of the US Federal Reserve policy meeting. But, technically, there is a higher possibility that the market has bottomed out near 10,040 suggest experts.

The Nifty50 registered a Spinning Top kind of indecisive formation as it faced selling pressure after retracing 38.2% of its last leg of fall from the highs of 10478 levels. However, this intraday selling can be attributed to the nervousness ahead of the major global event in the for form Fed meeting

As more or less market appears to have factored in the outcome of the event it should ideally stabilisie and rally unless there are going to be some nasty surprises from the Fed which are beyond the anticipation of the market.

Mohammad further added that there is a higher possibility of a bottom around 10040 levels and hence post Fed outcome if the market stabilises then the rally should get extend up to the levels of 10380. “Contrary to this a decisive breach of 10130 levels on intraday basis may again drag down the indices towards critical support zone of 10040 – 9980 levels,” he said.

India VIX fell down by 3.22 percent at 15.10. A decline in volatility from the last two trading sessions is providing some comfort to the Bulls but needs to fall below 13.50-13 to process for a short-term reversal after the recent decline of around 1100 point.

On the options front, maximum Put open interest is placed at 10000 followed by 10100 strikes while maximum Call open interest is at 10500 followed by 10400 strikes.

Meaningful Put writing was seen at 10200 strikes which could act as a support while Call writing is seen at 10250 followed by 10300 and 10350 strikes.

Option band signifies a trading range between 10050 to 10350 zones. The Nifty remained volatile and formed a small Bodied Candle on the daily chart which indicates that bears are putting pressure at higher levels but at the same time Bulls are not loosening their grip after the recent bottom of 10049 levels.

Now, it has to continue to hold above 10141 zones to witness an up move towards 10276 then 10333 zones while on the downside supports are seen at 10050 then psychological 10000 marks.

MORE WILL UPDATE SOON!!

6 fundamentally decent stocks are down 50% from their 52-week high

Most of these stocks were multi-baggers over the last three financial years.

For the market, 2018 has been a bad year. Benchmark indices are are currently down nearly 10 percent from their 52-week highs and for some stocks, the downer has been much harsher.

Several stocks fell considerably during the recent sell-off and some of them happen to be fundamentally good.

Moneycontrol identified stocks from the BSE universe that are now trading over 50 percent lower than their 52-week high prices, and also meet the following criteria:

1.  Both return on equity (ROE) and return on capital employed (ROCE) should be upwards of 25 percent in each of the last three fiscal years

2. Market capitalisation is greater than Rs 100 crore.

Only six stocks made the cut - PTL Enterprises, Arrow Greentech , Stampede Capital, Indo Count Industries, Vakrangee and Kesar Petroproducts.

Margins Profile

Kesar Petroproducts and PTL Enterprises are the only companies that reported better margins every year for the last three financial years.

Price Perfomance:

Almost all these stocks turned out to be multi-baggers over the las three financial years, as indicated below:

MORE WILL UPDATE SOON!!

Top 20 multibaggers of 2017 which gave up to 1000% return: are they still a buy?

Corrections in the price in the recent times have been sharper or close to 20-25%, this has created a buying opportunity in quality management and business.

  

To all those who thought that making money in equity markets was tough – the year 2017 proved them all wrong. There were more than 350 stocks on the BSE which more than doubled investors’ wealth in the same period maximum being from the small & midcap theme.

The Indian market was driven more by sentiments in the year 2017 rather than fundamentals but for the year 2018, it is exactly opposite. A large part of the rally was seen in the broader market which saw many small & midcaps more than doubling investors’ wealth in the previous calendar year.

However, there are many stocks which saw wealth erosion in the year 2018 up to 50 percent. Stocks which came under pressure after a sharp rally in the year 2017 include names like California Software which rose over 1000 percent, followed by Sanwaria Consumer which gained 958 percent, and Weizmann Forex which was up 732 percent.

Other stocks which more than doubled investors’ wealth in the same period include names like ITL Industries, Bharat Seats, Gopala Polyplast, C&C Construction, Paramount Communications, Shalimar Wires, Frontier Springs etc. among others.

2017 saw a year of stock market frenzy, especially in small and midcap stocks. One thing to watch is that most of these stocks are highly illiquid. Some stocks the volume is few hundreds. So in a bull run, all these stocks saw buying amid extremely low volumes,” Pankaj Karde, Head- Institutional Sales of Systematix Shares told Moneycontrol.

They were beneficiaries of low liquidity. Now that the markets are in a correction mode, it is justified that these stocks correct the maximum. I believe if you have more than doubled your money, you should exit and start investing in more liquid better names.

The large part of the rally was led by domestic institutional investors (DIIs) as money from retail investors flowed into mutual funds got directed in the small & midcap space which gathering most attention.

However, most experts now think that if you have made money in the year 2017 in the small & midcap names then the time has come to either book profits and invest in more liquid quality mid or largecap names. But, if you have a longer holding period horizon then these stocks could do well.

Large cap or just quality stocks have also seen a 10% correction, and in a falling market, illiquid stocks will be a death trap, suggest experts.

Unlike 2017, 2018 will be a year of high volatility & uncertainly as we are getting closer to an election cycle. Global economic growth is strong but that is coming back with higher inflation, as a result of which bond yields went higher and that led to global sell-off in equities,” Soumen Chatterjee, Head of Research, Guiness securities told Moneycontrol.

Back home, higher inflation remains a risk due to rising crude oil prices with added uncertainty around monsoon this year and elections. Therefore, it is advised to keep moderate return expectations this year and book partial profit in space where stocks has given stellar returns in past few years with stretched valuations and shift to more quality names where earnings visibility is high with a reasonable valuation.

Corrections in the price in the recent times have been sharper or close to 20-25%, this has created a buying opportunity in quality management and business.

However, every falling knife is not bound to cut your hands. In the recent times the correction was due to global sentiments and overvaluations in some of the stocks.

Frankly, I would take this correction very positively. Fundamentally overvalued stocks will see selling. On the other hand, strong names would create buying opportunities. On an overall scenario, I would like to agree that mid and small cap space is unlikely to outperform in the year 2018.

But, I will also say that we buy smaller names with a 2-3 year horizon. So, if the long term story remains intact, I will hold on to the stocks. Market timing in smaller stocks is very difficult and hence it is best to stay invested if the fundamentals haven’t changed.

Top stocks to buy in the small & midcap space which saw a big correction:

Analyst: Ritesh Ashar, Chief Strategy Officer, at KIFS Trade Capital

Sanwaria Consumer:

The company has posted excellent results in Q3 and company is looking at top line growth of 25% with the planning of new stores in MP. Promoters is confident about the growth story and have increased the stake in last quarter.

WeizmannForex Ltd:

The company is trading at a higher PE ratio of 52.98x, making it more expensive than the average consumer finance stock. In terms of returns, Weizmann Forex generated 19.32% in the past year, which is 11.91% over the consumer finance sector.

Weizmann forex to acquire payment and solution startup JaldiCash. At the CMP stock is overvalued but can be accumulated at lower levels. Investors can stay invested in the stock.

Analyst: Soumen Chatterjee, Head of Research, Guiness securities

Bharat Seats:

We continue to hold the stock on superior return on equity around 33 percent. The stock is reasonably priced at 22-23 times of its trailing earnings.

Strong Parentage: Bharat Seats Ltd is a joint Venture of Suzuki Motor Corporation, Japan, Maruti Suzuki India Ltd and the Relans for the manufacture of complete seating systems and interior components for the automotive and surface transport.

MORE WILL UPDATE SOON!!

Nifty may break 10,000 soon, but these 10 stocks can give up to 76% return

Here is the list of 10 stocks that can give up to 76 percent return.

 

Bears are not in a position to give up their game fully since February barring few sessions, as the market fell 10 percent from its record high hit on January 29, 2018.

In fact, it has turned negative after Budget 2018, hitting fresh lows of the calendar year. Trend has been so negative-to-volatile that buyers strength has been declining day after day.

Everyone on the Street agreed that correction was long overdue after one-sided 35 percent rally from 2017 till January 2018.

There are several reasons that pulled down the Nifty by more than 1,100 points in one and half months.

To name few reasons which are major ones are long term capital gains tax imposition in the Union Budget, likely early & more than three Fed rate hikes in 2018, banking fraud and political uncertainties after TDP pulled out from NDA government.

As these are enough and additional reasons ahead of March quarter earnings, the Nifty is likely to breach 10,000 levels soon amid volatile trade, technical as well as fundamentals experts suggest.

According to them, it is a "sell on rally" market now. The Nifty is around 100 points away from its 10,000-mark.

Indian stock markets continue to slide down due to uncertainty around the banking sector and current political situation given the election schedule this year. This has the potential to de-rail the sentiment & earnings growth for the next year.

While reiterating immediate target of 10,000 for Nifty, Jayant Manglik, President, Religare Broking said he feels correction could be steep on broader front thus suggest maintaining extra caution in midcap and smallcap space.

"Breach of the swing low confirms wave extension on the downside with key targets placed at 10,000-9,800.

Here is the list of 10 stocks that can give up to 76 percent return:

Brokerage: Prabhudas Lilladher

SBI | Rating - Buy | Target - Rs 341 | Return - 37%

Prabhudas Lilladher attended the SBI's subsidiaries day represented by chief executives of non-lending business and key RRBs. Key takeaways from the session were (i) Improve engagement with bank for cross sell & leverage bank's technology knowhow & reach (ii) Improve USP of each subsidiary to create niche visibility over next few years and (iii) Plans for unlocking value for each subsidiary.

Currently 7 percent of SBI's total fee income is contributed from cross sell of products of subs which SBI targets to increase the share by 3x in next few years, while key large subs contributed 20 percent of Bank's profits in FY17 and has substantially improved in FY18, we believe bank network synergies are yet to be exploited and could further improve market share for subs, adding higher value to the bank valuation.

In current SOTP (sum-of-the-part) of Rs 341 (reduced from Rs 350) we value subs at Rs 80 (up from Rs 74 on recent TP increase in SBI Life). We have tweaked FY18 & FY19 numbers on credit losses for the bank due to some impact from revised stressed asset guidelines but should also benefit from the resolution process from NCLT. Retain 'Buy'.

Brokerage: Motilal Oswal

Shilpa Medicare | Rating - Buy | Target - Rs 749 | Return - 53%

The receipt of establishment inspection report (EIR), with unchanged status – voluntary action initiated (VAI) – for the Jadcherla formulations facility from the USFDA is a positive.

The USFDA had inspected this facility over November 20-30, 2017. It had issued a form 483, with 10 observations.

Shilpa has only one formulation and resolution of the issues in the 483 was critical for its existing business and for future ANDA approvals. The issuance of EIR and status remaining unchanged at VAI implies that the inspection is closed successfully and will not be a show stopper for SLPA’s future approvals.

Currently, Shilpa has 31 ANDAs pending for approvals. On overall basis, we expect 16 percent CAGR in sales to Rs 1,200 crore and 35 percent CAGR in PAT to Rs 270 crore over FY17-20.

We re-iterate Buy with price target of Rs 749.

Hindustan Unilever | Rating - Buy | Target - Rs 1,515 | Return - 17%

Market demand has been improving gradually over the past few quarters. Encouragingly, growth has been broad-based across categories and regions.

Central India continues to do better than the rest of the regions for HUL, in line with the company’s strategy.

Although rural performance has improved substantially, rural demand growth is yet to reach the buoyant historical levels, when it was 1.5-2x of urban demand growth. Wholesale and CSD channels, which were lagging behind for many quarters, are now back to normal.

Tailwinds in terms of rural demand recovery, margin accretion due to further benefits of zero based budgeting (ZBB) and medium-term benefits of GST will also accelerate its earnings trajectory.

Adspend intensity in the market was almost flattish during the quarter.

Consequently, we expect 18.8 percent EPS growth over FY17-20, as against 6.1/10.6/10.7 percent EPS CAGR over the last 3/5/10 years. We maintain our Buy rating with a revised target price of Rs 1,515.

Brokerage: Kotak Securities

Dilip Buildcon | Rating - Buy | Target - Rs 1,217 | Return - 26%

We met with the management of Dilip Buildcon and NHAI official during their investor meet to get an understanding of upcoming opportunities in road sector and how DBL is expected to benefit from the same.

DBL has managed to bag orders worth Rs 13,900 crore in current fiscal till date and has mentioned that effective bidding is the key to win the projects and maintain margins.

Company is confident of maintaining similar trend in order inflows for FY19 too with improved execution.

We maintain estimates and target price of Rs 1,217 based on 20x FY20 earnings.

Brokerage: KR Choksey

Aarti Industries | Rating - Buy | Target - Rs 1,455 | Return - 28%

The company currently trades at two year forward P/E multiple of 20x. Going forward, we believe Aarti Industries should fetch premium valuations on account of 1) higher volumes aided by capacity addition plans; 2) bolstering demand from end user segments; 3) higher revenue visibility owing to multi-year deals; and 4) steady balance sheet despite higher capital requirements.

Accordingly, we value the company at a P/E multiple of 25x on FY20E and arrive at a target price of Rs 1,455 per share resulting into an upside of 27.6 percent from the CMP of Rs 1,140 per share. We assign a 'Buy' rating on the stock.

Going ahead, we estimate revenue/EBITDA/PAT to grow at 16/13/14 percent over FY17-FY20E. Further, we factor in a total capex of Rs 1,750 crore over FY18-FY20E for the capacity addition plans.

We expect the company to fund the same partially through debt and partially through internal accruals. Accordingly, we expect the total debt of the company to increase by Rs 350 crore with net debt/equity ratio to improve to 0.7x by FY20. Consequently we estimate return ratios to observe a drop in FY20 with ROCE/ROE to reach 18/19 percent by FY20 on account of ongoing capex plans.

Brokerage: ICICIdirect

Gujarat State Petronet | Rating - Buy | Target - Rs 200 | Return - 12%

Gujarat State Petronet's (GSPL) board has approved the acquisition of up to 28.4 percent stake in Gujarat Gas from GSPC. The transaction will involve acquisition of 3.9 crore shares and be a related party transaction between two government companies, thus, requiring no regulatory approval. Currently, GSPL has a 25.8 percent stake in Gujarat Gas.

The new acquisition will take the total stake to 54.1 percent making it a holding company of Gujarat Gas.

GSPL's transmission business is expected to report stable volumes in the backdrop of growth in the CGD and PNG sectors and increased LNG capacity in Gujarat.

In its last published public consultation document, GSPL proposed final tariffs of Rs 59.65/mmbtu (around Rs 2.1/scm) for 2017-18 to 2026-27 versus Rs 26.58/mmbtu (around Rs 1/scm) in 2016-17 for its trunk pipelines.

Hence, on the back of the same, we assume tariffs of Rs 1.35/scm for FY19. We value GSPL’s investments in CGD entities like Gujarat Gas (54.1 percent stake) and Sabarmati Gas (27.5 percent) at Rs 104 per share and standalone business at Rs 96 per share to arrive at a price target of Rs 200. We have a Buy recommendation on GSPL.

Brokerage: Khambatta Securities

Fourth Dimension Solutions | Rating - Buy | Target - Rs 294 | Return - 76%

Fourth Dimension Solutions has strong experience in executing e-governance and other projects for government agencies and PSUs. We expect FDS to benefit from various ICT initiatives and incremental IT spend of the central and state governments going forward.

FDS has plans to raise fresh capital through the issue of equity shares and convertible equity capital to the tune of Rs 350 crore. The equity infusion will support strong business growth for the company over the next few years.

FDS’s margins are quite low reflecting hardware reseller margins. As the company’s projects move into the “go-live” phase, we expect the share of higher-margin service revenues to increase resulting in healthy overall margin expansion.

FDS is now eligible to directly bid for public projects up to Rs 1,000 crore in value. This will help drive growth while supporting margin expansion. FDS’s partnership with French software major Dassault Systèmes and initiatives to enter the IT exports market will help the company move up the IT services value chain and contribute incremental revenue.

Based on a target P/E multiple of 18, we value FDS at Rs 294 with an upside potential of 76 percent and informing a Buy rating.

Brokerage: CD Equisearch

Supreme Industries | Rating - Accumulate | Target - Rs 1,416 | Return - 18%

Prodded by higher margins and fall in financial expense, Supreme’s earnings would perhaps grow at the fastest pace since fiscal ended March 2016. Higher allocation to government sponsored schemes like AMRUT, PMAS and others, demand for both agri and non-agri pipes would patently get a boost.

Yet severe fluctuations in polymer prices and its trickle effect on margins are not worthy of being ignored. Revival in hardly belittling plastic piping business, earnings would vigorously

resurrect next fiscal.

On balance, we maintain our accumulate rating on the stock with revised target of Rs 1,416 (previous target: Rs 1,289) based on 38x FY19e earnings over a period of 6-9 months (forward peg ratio cut to 1.4; four year historical P/E (FY18 included): 33x).

Brokerage: Reliance Securities

Federal Bank | Rating - Buy | Target - Rs 150 | Return - 65%

The bank is expected to deliver further improvement in operational performance led by improving loan book growth and improving assets liability mix. Advances grew by 5.3 percent QoQ to Rs 85,000 crore in Q3FY18, as SME, wholesale and retail (including Agri) book grew by 13.3 percent, 4.4 percent and 6.85 percent QoQ respectively.

Further, continued moderation in SMA-2 balance clearly suggests fresh slippage will show declining trend in FY19. Notably, the Bank is gradually coming out of the scenario marked with higher provisioning and continued stress on asset quality for last few quarters. Management expects credit cost to remain in comfortable level of 60-70bps in FY19.

Looking ahead, we expect the strong traction in earnings to continue owing to robust growth in loan book, moderate credit cost and healthy margins.

We expect the bank’s earnings to witness 33 percent CAGR through FY17-20E and reiterate Buy recommendation on the stock with an target price of Rs 150 based on 2.3x FY19E adjusted book value.

Brokerage: CESC Research

Rane Holdings | Rating - Buy | Target - Rs 3,183 | Return - 20%

Rane Holdings' revenues are estimated to grow at 18 percent CAGR over the next two years. Upsurge in OEM volumes coupled with focus on the Aftermarket segment would drive the top-line.

Also, the company’s margins are expected to improve on account of operating leverage, enhanced local procurement and energy savings.

Given the healthy top-line growth and margin improvement, RHL’s earnings are likely to grow at a CAGR of around 22 percent over FY18-20. Its return ratios are also estimated to expand due to margin improvement and reduction in leverage.

At CMP, the stock is trading at 19/15.8X FY19/20 EPS. We initiate coverage on Rane Holdings with a Buy recommendation and target price of Rs 3,183, valuing the stock at 19X FY20E EPS.

MORE WILL UPDATE SOON!!

Hold on tight! Nifty likely to touch Mount 12K by March 2019:

We have seen a weak start to the year with volatility globally & locally seeing stocks underperform. However, we think you could see another 10% upside in FY19 from June/July period onward as earnings start to grow.

  

Well, the old adage of 'greed & fear' is being perfectly played out with most participants extremely greedy at 11,000 and now fearful at 10200.

It was too good to last as 2017 saw hardly any volatility. The pain from February onward is a good wake up call to investors that there are no free lunches and volatility is the name of the game.

Most of the pain may be over at least in midcaps where corrections have been over 15-50 percent. On the Nifty, we could test 9800-10000 on the lower side in the month of March given that LTCG, dividend tax on mutual funds & NPA recognition on banks may see more pressure on bonds.

It will affect most countries globally, India included as exporters to the US would see pressure on business. However, the near-term pain could be a buying opportunity as in the longer term, Trump policies are having a huge positive on base metals & commodities.

The worst hit would be steel & aluminium sectors with Tata Steel on the steel side & Hindalco on the aluminium side hurting as Novelus the Canadian arm of Hindalco will have to bear large part of the pain.

We have seen a weak start to the year with volatility globally and locally, seeing stocks underperform. However, we think you could see another 10 percent upside in FY19 from June/July period onward as earnings start to grow. Our Nifty December 2018 target is 11700 and  March 2019 target 12000.

Well, the money which exited fixed income at 6.5 percent on yields to enter stocks is facing a double whammy with yields rising to nearly 7.9 percent and stocks doing poorly near term.

However, we think that once volatility subsides from April middle onward you should see flows pick up. We do not expect much pressure on redemption as equities as a favoured asset class is here to stay with most new entrants prepared to stay put on a longer timeline.

Well, the fraud episode of Nirav Modi could be termed as a one-off & as a prelude to that most other cases being opened are mostly crony Capitalism which has existed for a long time.

Most of the facts are well known as power, telecom, metals & infra have been stressed assets & most banks have already provisioned for them.

The bark may be worse than the bite & hence any further pain points may already have been priced in hence giving buying opportunities on stocks or sectors in financials.

 Top five stocks that you think could turn multibaggers in the next 2-3 years time

ITC

ITC is an extremely compelling buy at current levels with a target price of Rs 400 in the next 2 years. All its businesses are doing very well which also includes FMCG.

ITC Hariyali, Paper, milk, hotels, and in the apparels with the Wills Lifestyle brand growing should auger well for the stock. The underperformance in the tobacco business should stop and volume growth, as well as pricing, could come back.

The Aashirwad Atta brand itself does over Rs 4,000 crore of business; hence, ITC is now a full-fledged giant with tobacco no longer being the only growth driver. The stock trades at 27 times and 1-year forward. IIFL expects to double of market cap in the next 2-3 years.

SAIL

SAIL has seen a very good performance at the balance sheet level with cost controls driving EBIDTA margins to the highest level seen in the last 3 years.

Also, it is the best player on local dynamics as it is least affected by any US protectionist measures. SAIL is an integrated play with captive coal and iron ore seeing synergies play out very well. It is a buy at Rs68 for a target of Rs150 in the next 2 years.

NBCC

NBCC is the best play on the construction sector in the Tier 1/2/3 cities in India with company spearheading all Government land banks and having an order book of over Rs 1 lakh crore.

The best part about NBCC is that it does business with no capital requirement from the Government & is seeing its project management consultancy (PMC) business expand at the fastest rate since inception.

Also, Government construction and property development are seeing the highest growth rate in recent times. The stock is a buy at Rs185 for a target of Rs 400 in the next 2 years.

REC

REC is a power finance Company where NPA levels are the lowest in the industry. It mostly does 86 percent of its business with state discoms and has had no default even though power has been under stress due to poor linkages with coal, raw materials being under pressure.

The pressure on pricing is another pain point for thermal power Companies as solar power rates hurt competition. However, it is a Navratna Government undertaking and has a dividend yield of over 7 percent at present price of Rs 125.

We think the Government will see more relief measures like UDAY & Saubhagya Yojna to do away with stress on Power discoms and provide more funding for power financiers. The stock is a buy at Rs125 for 2 year time period and a target of Rs250.

ICICI Prudential Life Insurance Company

ICICI Prudential Life Insurance Company is the best new listing in the insurance sector with double-digit growth expected at least for the next 5 years.

Also, it will see earnings get a boost from higher bond yields as most investments are linked to benchmark yields.

Growing insurance business coupled with positive dynamics of rising middle incomes will see the stock double from present levels in next 3-years. The stock is a buy at Rs 380 for a target of Rs 750 which could be achieved in the next 3 years.

The rise in bond yields in the US from 1.5 percent in June 2016 to over 2.85 percent presently has seen emerging markets and India see foreign selling take place.

However, the volatility could be seen as another factor to sell in India as markets see money flow back to the US. This may be temporary as we think earnings in Indian Corporates should see double-digit growth & foreign flows will return to play the emerging market growth & demographic advantage of Indian consumption story.

MORE WILL UPDATE SOON!!