Eye on RBI policy meet this week; bet on these 2 Nifty stocks for 7-10% returns

The central bank could leave policy rates unchanged but hawkish comments from the governor would be slightly supportive for the currency.

  

On the domestic front, focus will now shift to this week's Monetary Policy Committee meeting. Expectation is that the central bank could hold rates unchanged, but hawkish comments from the governor would be slightly supportive for the currency.

Q1 FY19 results so far have been encouraging on a lower base due to Goods & Services Tax impact on earnings last year. In the coming week, around 450 companies will declare their corporate earnings. These include: Housing Development Finance Corporation (HDFC), Tata Motors, Oil & Natural GAs Corporation (ONGC), Tech Mahindra, Shree Cement, Axis Bank, Vedanta, UPL, Power Grid Corporation of India and Titan Company.

In the broader space, IDFC Bank, InterGlobe Aviation, Avenue Supermarts, Escorts, Idea Cellular, Central Bank of India, Godrej Consumer Products, IDFC, Dabur India, Bharat Electronics, Bank of India, Tata Global, Marico, Steel Authority of India and Wockhardt will announce earnings.

Investors will also keep an eye on macroeconomic data like India core infrastructure output for June, which will be released on Tuesday. India Nikkei Manufacturing Purchasers Managers' Index for July will be announced on Wednesday and Nikkei Services PMI for July on Friday.

India’s foreign exchange reserve for the week-ended July 27 and deposit and bank loan growth for the week-ended July 20 will also be released on Friday.

Larsen and Toubro (L&T)| CMP: Rs 1,311 | Target: Rs 1,450 | Return: 10 percent

L&T posted stellar set of numbers in Q1FY19. Consolidated PAT for Q1FY19 registered a strong growth of 36 percent on yoy basis to touch Rs. 1,215 crore.

While revenue came in at Rs. 28,283 crore for the quarter ended June 30, 2018, registering a growth of 18% on a y-o-y basis with pick up of execution momentum in project businesses, robust growth in services business and recognition of revenue on completed performances in Realty business under the newly introduced accounting standard for revenue recognition (IND AS 115). International revenue during the quarter at Rs 9,669 crore constituted 34% of the total revenue in line with previous year.

In Q1FY19, its key infrastructure segment, accounting for 43 percent of revenue, delivered 9.7 percent year-on-year growth due to improvement in execution. Apart from the power segment which saw a degrowth of 39 percent, which accounts merely 3.8 percent of the business, other segments such as heavy engineering delivered 29 percent growth, followed by a 37.4 percent growth in defence and a robust 38.5 percent growth in the hydrocarbon segment. Hydrocarbon, which accounts for 12.4 percent of the total topline witnessed a strong revival owing to higher oil prices and growth in capex.

Order flows of Rs 361.42 billion during the quarter, marking a growth of 37 percent, with pick-up in domestic ordering activity during Q1FY19 indicates better days for the firm ahead. The company has given 10-12 percent order inflow guidance for the current year, most of which is expected to come in the first half or by the third quarter of current fiscal.

The company has bagged new orders worth Rs 36,142 crore at the group level during the quarter ended June 30, 2018, recording a growth of 37%, International orders at Rs 9,404 crore constituted 26% of the total order inflow. Infrastructure, Hydrocarbon and Heavy Engineering businesses largely contributed to the growth in order inflows during the quarter.

Consolidated Order Book stood at Rs. 271,732 crore as at June 30, 2018 which provides strong visibility in terms of the revenue growth and profits over the next two years. International Order Book constituted 23% of the total Order Book. At CMP of Rs. 1,311 (Face value: Rs. 2), the stock trades at a P/E of 25x on FY18 EPS.

Going forward, L&T management is expecting order inflows to remain strong in FY19 ahead of the general elections in 2019. And with the execution improving and other businesses such as technology and finance making higher contribution, it should deliver double-digit growth in sales and earnings. We expect a target of Rs 1,450 in 9-12 months (25x at estimated FY19 EPS).

Asian Paints | CMP: Rs 1,434 | Target: Rs 1,600 | Return: 7 percent

Decorative paints business in India registered double digit volume growth in Q1FY19, aided by the low base effect of Q1FY18.

The Company witnessed 30.56 percent rise in consolidated profit at Rs 558.02 crore for the quarter ended June 2018. It has posted a net profit of Rs 427.41 crore in the corresponding quarter last year.

The company believes the GST rate reduction from 28% to 18% is a good move in the right direction and will help boost demand from small consumers. The company plans to pass on the benefit of rate reduction due to GST to consumers.

However, the management is cautious about the fact that the input prices have been increasing continuously, and they expect costs to inflate by at least 10% in the next quarter. The management has said that the price hikes taken in March 2018 and May 2018 (cumulatively 3.3%), only partially pass on the impact of the rise in RM costs. It expected to take further price increases to mitigate the impact. However, it has deferred the decision in lieu of the GST rate reduction.

In the Industrial business, good demand conditions in the General Industrial and Auto Refinish segment helped performance of the Automotive coatings JV (PPG-AP). While the Industrial Coatings JV (AP-PPG) saw good growth across both – protective coatings as well as powder coatings segment.

Overall, International operations faced challenging conditions with issues like forex unavailability, difficult weather conditions impacting business performance.

The company expects the recent reduction in GST rate on paints from 28% to 18% to reduce price differential between organized and unorganized players and drive market share gains. The company is taking steps to pass on the benefit of the 10ppt GST rate reduction to consumers. This would entail re-stickering of all company owned inventory to reflect the GST rate adjusted price.

While the reduction in GST rate should automatically drive 10% reduction in MRP, actual benefit passed on to the consumer may depend on the competitive intensity within the dealer network as most paint products are sold below MRP.

The company remains hopeful of recovery in demand going forward on the back of upcoming festive season as well as demand recovery in key South India market. The company plans a capex of Rs. 1,000 crore in standalone books in FY19, of which Rs. 800 crore would be incurred for its under-construction greenfield facilities in Mysuru and Vishakhapatnam. Consolidated capex is likely at Rs. 1,200 crore.

At CMP of Rs. 1,434 (Face value: Re. 1), the stock trades at a P/E of 67x on FY18 EPS which is at premium to its peers in the sector. Overall the rally in FMCG stocks is owing to a rush by investors to grab a piece of India's consumer demand story which has rerated the valuation of FMCG companies to the highest in nearly three decades.

The sector's rich valuation is owing to a combination of strong fund inflows on and a relative lack of opportunity for investors.

The stock of Asian Paints has rallied in recent times owing to strong result in Q1FY19, we still believe there is upside as it is one of the strong play on India’s consumption theme with quality management pedigree. We believe the stock will always trade at a premium as it is a market leader with a gigantic scale achieved over the years. We expect a target of Rs. 1600 by FY19 end.

MORE WILL UPDATE SOON!!

See Nifty at 11,450 levels; 5 largecaps, 1 midcap that could return up to 20%

Financial Advisors expects sideways to bullish movement for the Nifty in coming sessions, within a range of 11,450 on the higher side and 11,100 on the lower side.

  

Indices are soaring higher into uncharted territory without any interruption. Momentum is seen in state-run banks, whereas Nifty Metal and Midcap indices bounced back from their lows.

The suggested Double Top Buy pattern on the Point & Figure chart has got achieved. The Nifty's 5-day simple moving average (DMA) stands around 11,159, which indicates that the bull run is intact unless the index trades below it. The benchmark index has a higher gap unfilled around 11,185 levels. So, the possibility of prices retracing to fill the gap cannot be ruled out.

The Nifty has also given a classical flag pattern breakout. The target as per the pattern is 11,400, which is supportive for the bulls. It previous high of around 11,171 levels can act as support too.

Looking at the options data, the highest put open interest is seen around 11,000 strike, followed by 11,200 strike. Maximum call OI is seen around 11,500 levels, followed by 11,400. The data signifies an immediate trading range between 11500 and 11,100 levels.

We expect sideways to bullish movement in coming sessions, within a range of 11,450 on the higher side and 11,100 on the lower side. Stock specific action can also be seen. If the Nifty closes below 11,120 levels, it can correct to 10,930/10,880 levels.

The Bank Nifty is trading higher after a breakout from the tight range of 27,200 and 26,650. We expect sideways to bullish movement in a 27,700-27,300 range. The psychological mark of 28,000 can act as a resistance, while support lies around 27,350 levels.

Here is the list of five stocks that could return up to 20 percent in the short term:

Hindustan Zinc | Buy Range: Rs 267-270 | Target: Rs 320| Stop Loss: Rs 255 | Upside: 20%

After giving a decent fall, scrip seems to be bottoming out near its channel support line. Consistent formation of Bull candle near its support line giving a hope to Bulls for making long position in the scrip.

Formation of inverted H&S where right shoulder is in progress which is price reversal pattern indicates up move in coming sessions. The weekly chart is showing parity with its historical levels.

Oversold stochastic is also lending support its price action. One can go long around Rs 267-270 levels with the stop loss (SL) of Rs 255 for the target of Rs 320.

Federal Bank | Buy Range: Rs 87-89 | Target: Rs 105 | Stop Loss: Rs 77 | Upside: 20%

Daily chart of stock reveals that demand is increasing and supply is diminishing. Rising trend line from lower levels is displaying trend reversal and creates a buying opportunity at the current juncture.

Breakout of Inverted H&S on chart augur well for the Bulls and indicate surge on the upside.

Apart from this, the sustainability of MACD Histogram along with positive territory signals optimism, suggest upside move in the counter in the coming sessions. We suggest buying Federal bank around Rs 87-89 with SL of Rs 77 target Rs 105.

Tata Motors | Buy Range: Rs 267 | Target: Rs 320 | Stop Loss: Rs 248 | Upside: 20%

Strong support around Rs 260 levels suggests buying opportunity. Moreover, Bullish engulfing formation on weekly chart where current candle completely engulfs the previous candle is Bullish reversal pattern in nature and signals bullish tone in coming sessions.

While looking in a shorter time frame of the chart, it has formed Cup and Handle pattern which is also showing strength in the counter.

Indicator and oscillator are lending support to price action. One can take a long position at current level with the SL of Rs 248 for the target Rs 310 and Rs 330.

Karnataka Bank | Buy Range: Rs 113-115 | Target: Rs 133 | Stop Loss: Rs 103 | Upside: 18%

On a daily chart, the stock has formed Double bottom which is a bullish reversal formation indicates positive rhythm. Moreover, the stock has formed a Bullish Engulfing pattern which is also a Bullish reversal candlesticks pattern.

Trendline breakout is expected above 120 from where the momentum of upside can be seen in the counter. Furthermore, Momentum indicator RSI reading comes at 40 with a positive crossover which is a signal of optimism.

Based on the mentioned technical structure, we are expecting upside movement in the counter in coming sessions. We advise buying KTK bank around Rs 113-115 with SL of Rs 103 for the target of Rs 133.

DLF | Buy Range: Rs 183-185 | Target: Rs 215 | Stop Loss: Rs 168 | Upside: 17%

Price of DLF has seen a sharp rebound after hitting a low of Rs 168 where its key support is seen. The emergence of Tweezers bottom on the weekly chart is giving the possibility of a pullback on the higher side in coming sessions.

Moreover, Prices are forming Falling wedge pattern on the longer time frame of chart and resolute trend line breakout is expected to come above 192 from where it will increase its velocity.

RSI also gave trend line breakout after bottoming out near oversold zone and weekly MACD in uptrend along with declining histogram in negative territory thus supports bullish bias in the stock. We recommend buying DLF around Rs 184-185 with the stop loss of Rs 168 for the target of Rs 215.

MORE WILL UPDATE SOON!!

Top 10 moneymaking ideas by experts that could return 5-11%

The Nifty closed above 11,200 levels, which has opened target towards 11,350-11,450 levels on the Nifty.

  

The Nifty rose 2.4 percent for the week-ended July 27. Experts feel the rally is not over yet and see the index hitting fresh record highs in the August series.

The index finally broke out of the range to hit a fresh record high above 11,171. It closed above 11,200 levels, which has opened target towards 11,350-11,450 levels on the Nifty.

After the huge rally, the question that most investors are asking is whether the market is overbought now?

Experts feel the momentum has begun and the rally will take the index to fresh record highs before it halts. They advise investors to stay with the trend and not go short at current levels.

There is still a long way to go, we would rather re frame it as start of the new leg. With Friday’s gap-up opening, we see a breakout from previous highs with a breakaway gap indicating strong optimism to continue.

Since we have entered uncharted territory; it would be difficult to offer precise levels. We would not be surprised to see the index hastening towards 11,450–11,500 and beyond.

We sees 11,185 followed by 11,092 as immediate supports. Any possible decline towards these levels should ideally be used as a buying opportunity.

Here is a list of 10 moneymaking ideas by various experts that could return 5-11 percent in the next 1-2 months:

Motherson Sumi: Buy| CMP: Rs 320| Target: Rs 334-342| Stop Loss: Rs 307| Return 6-9%

On the daily chart, the stock is moving in a lower top lower bottom formation. The stock has formed a double bottom formation and has given a neckline breakout at Rs 308 levels.

Volumes are also increasing gradually which signals rising participation in the rally. The stock is well placed above its 100-day SMA which supports bullish sentiments ahead.

The daily strength indicator RSI and MACD both are in a bullish terrain which confirms strength in the near-term.

Century Textiles Ltd: Buy| CMP: Rs 938.65| Target: Rs 980-1000| Stop Loss: Rs 915| Return 5-7%

With current week's 7 percent gains, the stock has decisively broken out its nine weeks down sloping channel breakout at Rs 900 levels on the closing basis.

This breakout is accompanied by a rise in volumes which confirms trend reversal on the daily and weekly chart. The weekly strength indicator RSI has given a positive crossover from the oversold region.

GAIL India Ltd: Buy| CMP: Rs 378.65| Target: Rs 393-400| Stop Loss: Rs 366| Return 5-7%

With current week's 5 percent gains, the stock has decisively broken its resistance zone of Rs 377 levels on the weekly chart. The stock has also given its six months down sloping channel breakout at Rs 378 levels on the closing basis.

This breakout is accompanied by a rise in volumes which confirms trend reversal on the daily and the weekly chart. Currently, the stock is trading into a rising channel which supports a bullish trend in the short to near-term.

The weekly strength indicator RSI and the MACD both are in bullish terrain which confirms strength in near term.

HDFC Life: Buy| CMP: Rs 507.3| Target: Rs 535-545| Stop Loss: Rs 490| Return 6-8%

On the daily chart, the stock has given an ascending triangle breakout at Rs 506 levels. Volumes are also increasing gradually which signals rising participation in the rally.

The stock is well placed above its 20, 50 and 100-day SMA which supports bullish sentiments ahead. The weekly strength indicator RSI and the MACD both are in bullish terrain which confirms strength in near-term.

Arvind: Buy| LTP: Rs. 426.15| Target: Rs 469| Stop Loss: Rs 401.70| Return 10%

Last week, the stock prices finally come out of its congestion zone which in technical terms can be interpreted as a breakout from the ‘Triangle’ pattern. This was accompanied by higher than average daily volumes, providing credence to the breakout.

The stock has corrected a bit in the last couple of weeks, but we would rather construe this as a pull back and expect the stock to resume its uptrend. Hence, we recommend buying for an upside target of Rs.469 and stop loss at Rs.401.70.

Century Textiles Ltd: Buy| LTP: Rs 941.95| Target: Rs 998| Stop Loss: Rs 909| Return 6%

This stock has undergone massive price correction over the last few months. However, the correction got arrested recently and the stock slipped into consolidation mode.

On Friday, there was a decisive breakout seen from this short-term congestion and hence, we expect the stock to give a decent relief rally in next few days.

The weekly chart displays more strength and hence, one can look to go long for a positional target of Rs.998 in coming weeks. The stop loss needs to be fixed at Rs.909.

Phillips Carbon Black Ltd: Buy| LTP: Rs 234.85| Target: Rs 260 | Stop-loss: Rs. 220 | Return: 11%

After remaining on a sideways direction with negative biasness, Phillips Carbon registered a strong breakout from the crucial level of 20-days EMA placed at Rs 224 on the weekly chart.

Despite coming under pressure on the intraday basis, the scrip decisively managed to rebound at a new level, thus indicating a trend reversal on a short-term basis. The scrip also witnessed a significant volume breakout.

On the weekly price chart, the scrip registered a bullish candlestick pattern indicating a reversal in trend favoring upward momentum.

Further, the weekly RSI at 69 signaled a buying regime at a current level along with positive cues from MACD suggesting an upward shift.

The scrip is currently holding immediate resistance at Rs 291 and immediate support level at Rs 199. We have a BUY recommendation for Phillips Carbon which is currently trading at Rs. 234.80

Biocon Ltd: Buy | LTP: Rs 586| Target: Rs. 620 | Stop-loss: Rs. 553 | Return: 6%

Last week Biocon formed a reversal trend favoring upward momentum after consolidating on multiple price level of Rs 674-637 in the last six month.

Although it remained flat during an early trade of the week, it gained strong momentum towards the weekend to close above 200-days EMA levels seen at Rs 560. It also witnessed a substantial support from volume buildup in the same period.

The positive breakout on weekly basis aided the scrip to form a strong bullish candlestick pattern indicating a sustained trend at the current level.

The weekly RSI trend registered an upward momentum at 62 suggesting a buying regime along with MACD trading on a bullish momentum.

The scrip has a support at 521 levels and medium-term resistance level at Rs 637. We have a BUY recommendation for Biocon which is currently trading at Rs. 586.20

Cholamandalam Investment & Finance Co. Ltd: Sell | LTP: Rs 1463| Target: Rs. 1,395 | Stop-loss: Rs. 1,542 | Downside: 5%

Cholamandalam Investment mostly traded on a sideways direction favoring the negative biasness on its one-month price chart, and consolidated from Rs 1,608 levels towards a low of Rs 1,446.

Last week the scrip witnessed a setback as it slipped below crucial support of 200-days EMA level placed at Rs 1,476. Further, the volume growth remained to subdue to drop about 5 percent on an intraday basis.

The scrip trend indicated short-term consolidation which is seen with a formation of bearish candlestick pattern on its weekly price chart post-breach below important moving average level.

Further, the secondary momentum trend continued to indicate negative signal with RSI slipping below at 48 coupled with the bearish outlook from MACD trend.

The scrip is facing a resistance at 1600 levels and crucial support at Rs 1,274 levels. We have a SELL recommendation for Cholamandalam Investment which is currently trading at Rs. 1463.35.

Federal Bank: Buy| LTP: 90.65| Target: Rs 98| Stop Loss: Rs 84| Return 9%

This counter appears to have resumed its uptrend from the 8-day old consolidation phase after the huge single day up move it witnessed on 17th of July.

As the momentum appears to be very strong it should aim at bridging the bearish gap seen in the zone of 98 – 93 registered on 10th of May 2017. Hence, positional traders should buy into this counter for a target of Rs 98 with a stop below Rs 84 on a closing basis.

MORE WILL UPDATE SOON!!