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Nifty has remained above 11600 once it moved above these levels in the early part of the week. The index is expected to remain in the range while the stock specific moves are likely to come on surface. The volatility has remained low which signifies that the current trend should continue. Move above 14% in India VIX only would lead to any major profit booking in near term. The recent rollovers in Nifty are seen on rising roll cost of 0.5% which is higher than the last three series average of 0.3%. This means the market may consolidate for sometime before picking up the uptrend again.

Index Outlook

Bank Nifty : The Bank Nifty ended the August F&O series on a muted note where the private banks continued to witness profit booking whereas the fall extended in Yes Bank which slipped nearly 6% on the last day of the week. Short covering trend seen in few PSU banks which has provided cushion to the index.

Derivatives strategies

Buy Shree Cement (SHRCEM) September Future in the range of 18970-19120, Target: 21180, Stop Loss: 17770

Rationale:

The set up for Nifty remains accretive for stock specific recovery as it is expected to consolidate in the range of 11600-11800 at the start of September series. Stocks with stable rollover actions are seeing good price performance, suggesting august series price buoyancy to continue. Cement stocks are seeing good price move and at the start of the series, the long bias in the Shree Cement has seen smooth rollover to September series. As long as this long addition trend continues ,the stock is likely to head higher. Stocks is yet to witness any major delivery based action since the stock started recovering in July series, this suggest strong hands are still intact in the stock. MORE WILL UPDATE SOON!!

Brokerages upgrade these 20 stocks in August; should you buy?

The Sensex and Nifty rallied more than 9 percent each to scale new highs of 38,989.65 and 11,760.20 respectively in current week while the BSE Midcap index jumped over 8 percent and Smallcap climbed over 6 percent in two months.

 

The strong momentum built up in the market in July, due to in line-to-better-than-expected June quarter earnings, continued in August as well. The Sensex and Nifty rallied more than 9 percent each to scale new highs of 38,989.65 and 11,760.20, respectively, in the current week. The BSE Midcap and Smallcap indices jumped over 8 percent and 6 percent in two months, respectively.

Apart from earnings, improved foreign institutional inflow, consistent support from domestic institutional investors and easing global trade tensions lifted market sentiment. Experts believe the momentum is likely to continue for the next few months.

We remain constructive on Indian equities going forward. We essentially derive our confidence from the pick-up in industrial activity and robust consumer demand aided by strong rural growth, which has now begun to reflect in Q1 FY19 earnings.

We see earnings growth of over 15 percent CAGR in FY19 and FY20. If this pans out as expected, we may even see a compression in market P/E multiple, which seems relatively elevated at current levels.

Jubilant Foodworks: Buy | Target: Rs 1,750 | Return: 12%

Global brokerage firm UBS has upgraded the stock rating to Neutral from Sell and also raised target price to Rs 1,750 from Rs 950, implying potential upside of 13 percent.

Revenue and same-store-sales growth momentum can be maintained by the company and Jubilant is unlikely to lose the battle against its competitors in the long run.

We see limited upside till return on invested capital (RoIC) improvements begin to show.

Brokerage: Kotak Securities

Phoenix Mills: Buy | Target: Rs 707 | Return: 16%

Revenue growth going forward is likely to be led by rental renewals and improvement in commercial and hospitality revenues. We maintain estimates and expect revenues to grow at a CAGR of 7.4 percent between FY18-20.

Operating margins improved during the quarter on YoY basis but were impacted by fit outs going on at HSP which led to lower CAM charges. Going forward, we expect operating margins of 48.7/49.5 percent for FY19/20 respectively.

We maintain estimates and expect net profits to grow at a CAGR of 14.5 percent between FY18-20.

We continue to remain positive on the company and maintain price target of Rs 707 based on sum of the parts valuation on FY20 estimates. Owing to adequate upside from current levels, we upgrade the stock to Buy from Accumulate earlier.

ITD Cementation: Buy | Target: Rs 190 | Return: 41%

Strong, 25 percent, Q1 FY19 revenue growth was a sign of the shape of things to come for ITD Cementation. Q2FY19 is even better with even stronger revenue growth, implying execution is gathering pace with each passing quarter.

The quarter could have been better on order additions, but a healthy L1 status and a buoyant opportunity landscape suggest better days ahead.

With its strong order backlog (and good progress in new orders), a buoyant opportunity landscape and a healthy balance sheet, the future looks bright. The fall in the stock price (around 17 percent in three months, around 29 percent in six) renders it attractive. Thus, we upgrade it to a Buy.

We value it at a PE of 16x FY20 to arrive at a target price of Rs 190. Risk would be any slower-than-expected execution.

Swaraj Engines: Buy | Target: Rs 2,498 | Return: 40%

We expect that triggers for tractor growth and expected strong growth in FY19 would throw up prospects for Swaraj Engines to post strong earnings growth. Due to the recent drop in the stock price we upgrade rating to a Buy.

Against the backdrop of the 11 percent, CAGR in volumes over FY18-20 to 1,14,106, units, we expect revenue to grow 10 percent to Rs 930 crore and lead to an 11 percent CAGR in EBITDA. With the company’s lean cost structure and strong balance sheet, we value the stock at 30x FY20e EPS of `83.3 and arrive at a target price of Rs 2,498.

Risk would be constrained volume growth in M&M tractors would cut into volume and earnings growth.

Everest Industries: Buy | Target: Rs 671 | Return: 20%

The sound performance of its BP division and its de-leveraging led Everest to report its highest-ever quarterly PAT. Its Steel Building division’s roller-coaster performance, though, will continue to be a matter of concern.

We believe that Everest will benefit from rising demand because of its widest range of roofing products, its continuous focus on launching variants with value-added features and its greater operating efficiency. We upgrade rating to a Buy, with a target price of Rs 671.

Risks would be rise in input costs, currency fluctuations.

Oracle Financial Services: Accumulate | Target: Rs 4,650 | Return: 12%

Despite the decline in new license revenue, OFSS has seen healthy deal signings in the new license sales in Q1FY19; bookings have grown 40 percent YoY to USD 28 million as on Q1FY19 led by the new OBP deal win. The management indicated of one more large OBP deal in the pipeline and expects license revenue to cross $ 100 million for full year FY19 (over 13 percent YoY growth in bookings) we have estimated license revenue growth of 14 percent YoY in FY19.

We upgrade earnings estimates by 9 percent for FY20/FY21. We upgrade OFSS to an Accumulate (Reduce earlier) rating and rollover to a Sep’19 target price of Rs 4,650 (Rs 4,250 earlier) based on 21.5x one-year forward PER.

Sun Pharma: Buy | Target: Rs 690 | Return: 11%

Q1 numbers were upbeat on the earnings front while momentum in speciality pipeline ramp-up also looks promising. Going ahead, the management expects near term margins to get impacted due to frontloading of cost of specialty launches. This optical move is the culmination of the management’s long going endeavour for a drift from generics to specialty in the backdrop of US headwinds. This, we believe, is the key differentiator vis-à-vis peers.

The management has reiterated double digit growth guidance for FY19 with slew of specialty launches in the US besides Halol decongestion. We upgrade the stock to Buy as we believe the management is hitting the right chord with sustained planning and investments in the specialty portfolio. Target price is Rs 690 based on 26x FY20E EPS of Rs 25.1 and Rs 38 NPV for Tildrakizumab.

Godrej Properties: Buy | Target: Rs 899 | Return: 29%

We have upgraded the stock to Buy from Add and maintained target price at Rs 899 per shares after Q1 earnings.

Bandra-Kurla Complex commercial project contributed majority of revenue in Q1FY19 and sales volumes were driven by new launches.

Earnings were muted on implementation of IndAS 115 accounting standard.

Equitas Holdings: Buy | Target: Rs 190 | Return: 23%

We have upgraded the stock to Buy from Add with increased target price at Rs 190 from Rs 180 per share.

Earnings upgrades are driven by asset growth. We have changed FY18-20 loan growth CAGR from 25.1 percent to 35.8 percent and upgraded earnings estimates by 3-12 percent for FY19-20.

APL Apollo Tubes: Buy | Target: Rs 2,120 | Return: 25%

APL Apollo reported strong set of numbers during Q1 FY19 driven by robust pickup in volumes. The company registered 45 percent topline growth in Q1 FY19 backed by around 14 percent YoY growth in overall volume and around 28 percent YoY increase in realisation across product portfolio.

Going forward, volume growth is likely to remain strong driven by higher underlying product demand and benefits arising from ramp-up of new capacities that would cater to new end-use segments. The rise in share of high margin products would translate into robust earnings growth. We upgrade rating to Buy with the target price of Rs 2,120.

NTPC: Buy | Target: Rs 187 | Return: 11%

NTPC reported Q1 FY19 performance largely inline with estimates with the standalone topline growing around 14 percent YoY. The growth was primarily aided by 8 percent growth in power generation and sharp jump in tariff (improved from an average of Rs 3.23 in FY18 to Rs 3.36 in Q1 FY19).

Going forward, the management has guided for the limited impact of coal shortages in the rest of FY19. NTPC’s total group capacity at the end of Q1 FY19 has reached to around 54GW and the company is targeting to add 5GW capacity each in FY19E and FY20E. With these additions, the overall capacity is poised to reach around 64GW by FY20E.

Going forward, new capacities coming on-stream and PLF improvement would be the key drivers of revenues and earnings for the Company. With recent correction in stock price, we upgrade rating to Buy with target price of Rs 187.

Oberoi Realty: Buy | Target: Rs 598 | Return: 30%

After a muted Q4FY18, ORL had an impressive start to FY19 clocking in 0.3 million sqft in pre-sales and Rs 620 crore in sales value. Revenue came in at Rs 890 crore in Q1FY19 (lower by Rs 1,130 crore due to IND AS 115). Since ORL's contracts don't have a termination clause, ORL can continue to follow percentage completion method for revenue recognition.

ORL will continue to assess internal thresholds for booking margins. While the Borivali project has met margin recognition in Q1FY19, for Mulund the entire pending margins will be recognised only later in FY19E. ORL’s recent QIP proceed of Rs 1,200 crore will be used as growth capital towards fresh land purchases (not too eager to indulge in JDAs).

With recent price correction we upgrade ORL to Buy from Neutral with Rs 598 per share target price.

ACC: Buy | Target: Rs 1,900 | Return: 17%

We have upgraded the stock to Buy from Neutral and raised target price to Rs 1,900 from Rs 1,890 earlier.

After correction, valuations are no longer demanding. Cycle uptrend has begun and earnings recovery is on track.

Volume upside in ACC is limited, but it may surprise on realisations/costs.

Ambuja Cements: Buy | Target: Rs 295 | Return: 25%

We have upgraded the stock to Buy from Neutral earlier but slashed target price to Rs 295 from Rs 300 as post-correction valuations are attractive.

As demand growth continues, earnings outlook looks better. New capacity improved its volume outlook. We see synergy benefits to improve after master supply agreement.

DHFL: Buy | Target: Rs 775 | Return: 16%

Return on equity (ROE) improvement should drive re-rating for DHFL. We expect ROEs to improve to 15-16 percent despite dilution built in FY19F.

We have upgraded DHFL to Buy with target price of Rs 775 per share.

Indiabulls Housing: Buy | Target: Rs 1,750 | Return: 35%

We have upgraded the stock to Buy from Neutral and raised target price to Rs 1,750 from Rs 1,500 per share earlier. We also raised profit estimates by 3-7 percent.

We factored in lower provisioning & better growth under IndAS. We expect RoE of 27-29 percent on increased net worth.

BPCL: Buy | Target: Rs 509 | Return: 42%

We upgrade BPCL to Buy from Reduce, as we believe the oil marketing companies (OMCs) would be able to pass on impact of higher crude prices on retail diesel/gasoline sales indicated from recent recovery in margins despite elevated crude prices presently at around $75 per barrel. We revised target price to Rs 509 from Rs 496, as we expect higher retail margins from Rs 2 per litre to Rs 2.2 per litre.

We increased FY19E EPS by 15 percent and FY20E EPS by 20 percent on higher retail margins.

Eicher Motors: Buy | Target: Rs 32,249 | Return: 12%

Company's Q1 results are in-line with Royal Enfield's Margin at 32.3 percent & VECV's at 9.2 percent. Royal Enfield continued to post same-store-sales growth of 10 percent.

Competition is still couple of years away. Even after volume growth moderated, company is still a 25 percent earnings CAGR story.

We have upgraded the stock to Buy with a target price at Rs 32,249 per share.

M&M: Buy | Target: Rs 1,042 | Return: 6%

We have upgraded the stock to Buy from Hold and raised target price to Rs 1,042 from Rs 950 per share as Q1 earnings beat estimates by 5 percent driven by a strong margin.

Company is relatively most impacted among OEMs going into BS VI emission norms. Tractors are expected to hit a downcycle possibly in FY21.

Till FY20, company can continue the strong ride. We have raised FY19/20 earnings estimates to 13/15 percent.

Colgate Palmolive: Outperform | Target: 1,320 | Return: 15%

We have upgraded the stock to Outperform from Neutral with increased target price at Rs 1,320 from Rs 1,150 per share earlier.

Market share loss is likely to stem as Patanjali's impact reduced. We expect company's market share to stop dropping in the next two quarters.

Margin will be lower in FY19 but will recover in FY20. We have increased FY20/21 earnings estimate by 1-4 percent.

MORE WILL UPDATE SOON!!

Short-term traders are advised to remain light in case Nifty hits 12K in September

September may not be a stronger month and should ideally witness profit booking as the rally is stretched on the upside.

 

In line with our projections given in these columns in the last two months, the move was pretty strong but we should not forget that such a move was seen after witnessing an extremely range bound activity in the months of May and June.

So, September may not  be a stronger month and should ideally witness profit booking as the rally is stretched on the upside.

This is the 9th week from the lows of 10,556. This kind of vertical up move was not witnessed in the recent past at least from June 2017 onwards as all the rallies perished after 6 – 8 weeks paving the way for multi-week correction.

However, by looking at larger trends we draw a lot of comforts as this rally has legs on the upside. In Elliot Wave parlance this leg of the move is clearly looking like a Wave 3.

It means that any correction in the form of Wave 4 is going to present an opportunity to create fresh long positions as one price cycle will end only after the completion of 5 legs.

It is difficult to project where exactly wave 3 is going to end. But, taking different parameters on short-term charts we can conclude that this leg of up move is nearing its end which should be followed by a multi-week correction.

So, the short-term traders are advised to remain cautiously optimistic as this rally is already 9 weeks old and appears to be having limited upsides.

On the upside, there is still room, and in case 11,760 is breached Nifty will head towards 12,000. But, the correction post this upmove from whatever point it unfolds is going to be sharp and is likely to last just a couple of weeks.

In the light of the above explanation, momentum may last for some more time but as the series progresses bigger correction can’t be ruled out.

Short-term traders are advised to remain light on long positions at higher levels if we head towards 12000 as this month may remain volatile and choppy.

Outlook on Bank Nifty......

We suspect Bank Nifty has registered a short-term top on 10th of August itself around 28,300 levels as it is stuck up in a range of 28388 – 27740 levels since then.

Unless it registers a decisive breakout above 28390 levels sentiment in the broader markets may not be on a strong footing.

On such a breakout it can easily head towards a target of 29,000. Contrary to this a breakdown below this range shall result in the test of its 50-day Moving Average whose value is placed around 27,440 levels.

Views on rupee which touched a fresh low of Rs 71/USD......

The price action on Dalal Street is clearly suggesting that it is not much worried about the fall in rupee. Usually under normal conditions when US Dollar Index is falling rupee should have appreciated.

But, this time for the last 15 days Dollar Index is down from the highs of 96.86 (registered on 15th of August) to a recent low of 94.34 but it failed to trigger an upmove in rupee which is down from 69.50 to almost 71 in the last couple of days.

So this leg of fall in rupee is not driven by the appreciation of Dollar which will be the case usually. Hence, rupee may be falling on its own weight. If this weakness persists it can be a cause for concern sooner than later.

Technically speaking recent breakdown of rupee has a target placed around 72.15 which can be materialized if the dollar/pair pair settles above 71. Strength in rupee should not be expected unless dollar trades below 69.50 levels.

Top five 3-5 stock trading strategies for September series?

Here's a list of top three stocks which could give 4-5% return in September series:

Tata Elxsi: Buy| LTP: Rs 1435| Target: Rs 1490| Stop Loss: Rs 1390| Return 4%

After the recent correction from the lifetime highs of Rs 1490, this counter appears to have hit a bottom around Rs 1390 levels and resumed its upmove.

In case this correction culminates after 23 sessions of corrective and consolidation phase then ideally this counter shall register a new high beyond Rs 1490 levels.

Hence, positional traders should buy into this counter for an initial target of 1490 levels with a stop below 1390 on a closing basis.

There can be a minor hiccup around 1462 which should eventually be conquered in case of a fresh leg of the upswing is in progress.

Hero MotoCorp: Buy| LTP: 3253| Target: Rs 3418| Stop Loss: Rs 3180| Return 5%

This counter appears to have posted a short-term bottom around Rs 3190 levels after retracing 50 percent of its last leg of the upswing from the lows of Rs 3033 – 3350 levels.

Hence, positional traders can make use of this opportunity to go long for an initial target of Rs 3350 levels with a stop of Rs 3180. But, once Rs 3350 is conquered a bigger target towards Rs 3418 can’t be ruled out.

Bajaj Auto: Buy| LTP: Rs 2746| Target: Rs 2900| Stop Loss: Rs 2690| Return 5.6%

After a sharp fall from Rs 3150 levels, this counter appears to be consolidating in the range of Rs 2600 – 2770 levels for the last couple of weeks and looks ripe for a breakout.

In such a scenario the range target itself can be Rs 2930 kind of levels. Hence, one should make use of this consolidation phase to go long for a target of Rs 2900 levels with a stop below Rs 2690 on a closing basis.

MORE WILL UPDATE SOON!!

India's growth engine picks pace: GDP expands 8.2% in June quarter, highest in two years

India also cemented its status as the world’s fastest growing major economy, ahead of China, which grew 6.7 percent in April-June 2018.

   

The Indian economy grew 8.2 percent in April-June this year, the highest in two years, amid signs that households are buying more and companies are adding capacities, shrugging off the disorderly effects of the twin shocks of demonetisation and the goods and services tax (GST).

India also cemented its status as the world’s fastest growing major economy, ahead of China, which grew 6.7 percent in April-June 2018. At the current pace, India looks set to become the world’s fifth largest economy, ahead of the United Kingdom.

According to latest World Bank data, India edged past France to become the world's sixth largest economy. India's GDP stood at USD 2.597 trillion (Rs 178 lakh crore) in 2017 in current prices in market exchange rates, ahead of France whose GDP stood at USD 2.582 trillion (Rs 177 lakh crore) in 2017.

Finance minister Arun Jaitley on Wednesday said that India is likely to overtake United Kingdom (GDP USD 2.622 trillion) as the fifth largest economy by next year.

This is the fastest growth in eight quarters and signals quick turnaround aided by rapid construction activity, consumer spending and corporate investment.

Latest national income numbers put out by the Central Statistics Office (CSO) on Friday show that gross value added (GVA) in constant 2011-12 prices grew 8 percent in April-June 2018, significantly higher than the last year’s 5.6 percent growth during the same quarter.

Despite an uncertain international environment and volatile crude oil prices, India’s sustained growth reflects its strong resilience to adverse global conditions, because of strong economic fundamentals. The encouraging growth rates in agriculture, manufacturing and construction show that the growth momentum continues to be broad based. In addition, one also expects favourable monsoons to further boost agricultural output and rural consumption in the coming quarters.

GVA, which is GDP minus taxes, serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy.

The growth in India’s real or inflation-adjusted gross domestic product (GDP) in April-June, however, is also partly because of low growth of 5.6 percent in the same quarter last year, with a favourable “base effect” perhaps magnifying the expansion pace in the broader economy due.

Companies had significantly scaled down production in June 2017 as part of a business strategy to carry over as little old stock as possible into July when GST kicked-in, triggering an unexpected mid-year pre-GST “sale” season on many products at heavy price markdowns.

The manufacturing sector grew 13.5% percent in April-June, from (-) 1.8 percent in the same period last year, mirroring the trends in output activity seen in factory floors.

The index of industrial production (IIP) — the broadest approximation to measure activity across India’s factories — has grown at 5.2 percent during April-June 2018 compared with 1.9 percent in the same period last year.

The growth in the manufacturing sector is also broadly in line with shop-end sales, with car sales reporting record growth numbers, aided by greater disposable income or expectations of higher income in the coming months.

Private consumption seems to be improving. Private final consumption expenditure (PFCE), in inflation-adjusted prices — a gauge to measure changes in household spending — grew 8.6 percent in April-June to Rs 18.52 lakh crore from Rs 17.05 lakh crore in the same quarter last year.

Domestic air passenger traffic, robust rail freight movement, rising sales growth of passenger vehicles and strong consumer durables sales also point to a turnaround in the greater household spending.

The external sector, however, remains a weak link. Merchandise import growth has slowed because of gold imports, while export growth has also weakened.

The agriculture sector grew 5.3 percent, from 3 percent in the same period last year, largely reflecting a strong Rabi or winter sown harvest. The monsoon rains, critical for the summer-sown kharif crop, has been slightly below normal this year so far, particularly in the grain bowl states in north India, but the shortfall isn’t alarming enough to pull down growth in the broader economy.

The performance of industry and agriculture have encouragingly improved. It probably indicates some employment generation in labour-intensive sectors.

Construction activity has also rebounded strongly, growing 8.7 percent in April-June, from 1.8 percent in the same quarter last year, showing heightened activity in infrastructure, particularly road construction with strong multiplier effects across key sectors such as cement and steel.

The national income data also showed that government final consumption expenditure (GFCE) or government expenditure grew 7.5 percent at constant prices during the quarter-ended June to Rs 3.97 lakh crore from Rs 3.69 lakh crore during the same quarter a year ago.

Gross Fixed Capital Formation (GFCF), a useful metric to measure corporate investment activity, grew 10.0 percent in April-June.

The continued improvement in investment is probably reflecting better business and policy climate and a sustained pickup in this component will ensure that overall growth will find a firm footing,” Prasanna said, adding that the underperformance of the services components is largely due to lackluster performance of the trade segment, which is probably still adjusting to the GST transition and concomitant formalization.

Trade, hotels, transport, communication and services related to broadcasting grew at 6.7 percent in April-June as compared with 8.4 percent jump during the same period a year ago. Financial, real estate and professional services grew 6.5 percent, from 8.4 percent a year ago.

MORE WILL UPDATE SOON !!