Looking for multibaggers? Nearly 30 stocks turned smallcaps from midcaps in 2018

Most of the stocks might have technically moved to a midcap category or a smallcap but they still remain to be part of respective indices. Many stocks which gave multibagger returns in the year 2017 have corrected in double digits so far in the year 2018, and any drop could be used as a good buying opportunity.

The year 2017 was full of surprise as Indian market climbed all wall of worries to hit fresh record highs and the momentum continued till the first month of the year 2018, but then momentum fizzled out which led to a 10 percent kind of fall in benchmark indices from record highs.

The S&P BSE Sensex climbed Mount 36K while Nifty rose above 11,100 in the month of January but market lost momentum soon after the Budget was announced and global cues turned unfavorable.

Well, 2018 has been the year of a disappointment so far. Why do we say that? Because, data suggest that stocks in the Ultra largecap category, largecap, midcap and even smallcap in terms of market capitalization came down in the year 2018 as compared to the year 2017.

However, stocks in microcap category increased in the year 2018 which suggests that plenty of stocks witnessed huge correction which brought their market cap below Rs 1000 crore.

Most of the stocks might have technically moved to a midcap category or a smallcap but they still remain to be part of respective indices. Many stocks which gave multibagger returns in the year 2017 have corrected in double digits so far in the year 2018, and any drop could be used as a good buying opportunity.

Most of the stocks largely saw a correction which was more technical in nature while the fundamental aspect of some of these stocks still remain intact, suggest experts.

Shankar Sharma of First Global in an interview with CNBC-TV18 said that whenever markets correct, investors should use these dips and pick smallcap stocks which are displaying earnings growth potential.

The very reason Sharma likes smallcaps because they don’t get impacted by the worsening macro story (rise in interest rates or inflation).

However, most experts feel that smallcap theme, in general, might not be able to outperform in 2018 (select smallcaps could outperform) compared to largecaps which might hog the limelight. This is evident from data which shows less volatility in largecaps space compared to mid or smallcaps.

From the Ultra Largecap category in which the market capitalization is more than Rs100,000 crore as many as 3 stocks lost the tag of ultra largecaps which include names like Bajaj Finance, BPCL, and Tata Motors.

On the other hand only one stock, i.e. IndusInd Bank entered the Ultra Largecap space with a market capitalization of over Rs 100,000 crore in the year 2018.

 

In the largecap space which has a market capitalisation in the range of Rs 20,000 to Rs 100,000 crore, as many as 10 stocks lost the tag of largecaps in the year 2018 which include names like Bank of India, Canara Bank, Godrej Industries, MOSL, NBCC, PNB Housing Finance, RBL Bank etc. among others.

Technically, 4 stocks entered or reclaimed their tag in the largecap space which includes names like Castrol India, Gruh Finance, Jindal Steel & Power, and L&T Infotech.

  

After a blockbuster rally in the year 2017 in which midcaps took the lead, most analysts’ prefer largecaps in the year 2018 to lead the rally.

The valuations have come off from the recent highs which makes largecaps a preferred play. Mid-caps after witnessing correction are still trading at higher valuations than large caps so we do not rule out further correction if earnings falter in the coming quarters.

In the midcap space, nearly 30 stocks technically slipped from the midcap category so far in the year 2018 which include names like Allahabad Bank, Allcargo, BEML, DCB Bank, MMTC, Jaiprakash Associates, PNC Infratech, Rallis India, Equitas Holdings, Godfrey Phillips etc. among others.

MORE WILL UPDATE SOON!!

Profit booking likely close to 11,000; 4 stocks which could give up to 10% return

With volatility regime ahead of F&O expiry and earnings season coupled with Budget session due next week, it will be prudent to approach cautiously on long position and maintain a strict stop-loss below 10,600 levels.

  

The Indian equity market continued to post record high levels in its price chart despite turning volatile on a certain session. Although the small and midcap indices remained sluggish during the last week’s trade, Nifty decisively managed to breach its crucial psychological level of 10,900. It failed to sustain and closed marginal below at 10,894 on a closing basis.

On its price chart, the index formed a strong bullish candlestick pattern after breaking above the upper band in trend channel, indicating a positive signal in the upcoming session.

Further, the secondary momentum indicator suggested a strong support with RSI at 72 coupled in MACD at 121 above Signal Line.

Based on Fibonacci Retracement, the index is trading above all the levels with index getting immediate support at 10,650 level and immediate resistance level at 10,906 followed by 10,930 levels.

With volatility regime ahead of F&O expiry and earnings season coupled with Budget session due next week, it will be prudent to approach cautiously on long position and maintain a strict stop-loss below 10,600 levels.

Further, the market may witness a profit booking from a higher level to keep index under pressure and any short-term consolidation to be used as buying opportunity with upside price band at 10,980.

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

Prakash Industries Ltd: BUY| Target Rs 267 | Stop-loss Rs 230 | Return 10%

Prakash industries witnessed a healthy consolidation at 140 levels during the past month and since then it rebounded back to higher level in its daily price chart and continued to trade on a positive trajectory.

Despite witnessing a marginal consolidation from its 52-weeks high level placed at 276, the scrip recouped higher on the backdrop of volume support.

After closing the last session with 3% gain, the stock has formed a bullish candlestick pattern in its daily price chart coupled with strong support from secondary momentum indicator inclined towards uptrend trajectory.

Currently, the scrip is facing an immediate resistance from its 52-weeks high at 276 levels followed by 193 and major support will be seen at 213 levels. We have a BUY recommendation for Prakash Industries which is currently trading at Rs. 242.30

Balrampur Chini Mills Ltd: SELL | Target Rs 113 | Stop-loss Rs 135 | Return 9%

Balrampur Chini continued to face headwinds in its daily price movement after clocking to 52-weeks high at 182 level in past month and traded on a negative trajectory to close at 122 level, which is just one point above its 52-weeks low.

Further, it witnessed considerable short position on volume which further aided the negative outlook. On the weekly price chart, it continued to form a strong bearish candlestick pattern which is expected to keep the stock under pressure.

Further, the price is currently heading below its crucial level coupled with bearish crossover on its momentum indicator just happening last Thursday.

The stock is facing its resistance at 138 level while the support level at 105 will remain crucial for scrip. We have a SELL recommendation for Balrampur Chini which is currently trading at Rs. 122.70

GRUH Finance Ltd: BUY| Target R s725 | Stop-loss Rs 669 | Return 6%

Despite a flat trading during the initial session, GRUH Finance managed to breakout from upper band price channel and the end the session on positive momentum with over 15 percent gain on an intraday basis.

It also witnessed a similar support from volume context during the same period and end the session on a higher level at 687 on a closing basis.

On the daily price chart, the scrip formed a strong bullish candlestick pattern suggesting a possible uptrend following the last week’s momentum. Further, the RSI at 70 levels indicates a buying action at level coupled with positive MACD at 13.1 still intact above its Signal Line.

With current price trading above all moving average levels, a major support for the scrip is seen at 604 and resistance level at 783 upper band. We have a BUY recommendation for GRUH Finance which is currently trading at Rs. 687.80

Biocon Ltd: BUY| Target Rs. 596 | Stop-loss Rs 552 | Return 5 %

Biocon traded on uptrend trajectory after rebounding back from its lower level at 318 and continued to trade upward in its long-term price chart registering peak.

In the last trading session, the scrip witnessed a crucial breakout from its resistance level which was placed at 566 level, and thus indicated a positive momentum build up in its price chart.

With considerable growth in volume parallel to price movement during last week, the scrip formed a solid bullish candlestick pattern on its weekly price chart.

Further, a secondary momentum indicator continued to trade a positive level coupled with bullish crossover happening soon at the current level.

With price trading above all the levels in the last session, a major support for the scrip is placed at 539 levels and resistance level at 575 followed by 602 level. We have a BUY recommendation for Biocon which is currently trading at Rs. 569.3

MORE WILL UPDATE SOON!!