Nifty likely to hit 11,500 in FY19; 7 stocks to buy for next 2-3 years: Harendra Kumar

We are expecting a 14 percent kind of return for the fiscal year 2019 is not an unreasonable expectation.

  

Valuations are on the mend and have reached reasonable levels, and the earnings yield is nearing attractive levels. We are expecting a 14 percent kind of return for FY19  and it is not an unreasonable expectation.

Valuations are on the mend and have reached reasonable levels. The earnings yield is nearing attractive levels. We are expecting a 14 percent kind of return for the fiscal year 2019. It is not an unreasonable expectation.

It will be difficult for the Bears as Bulls will have an upper hand. It is difficult to ignore an economy which is growing at 7.5 percent with the best demographic profile and on the reform path.

Our index target for the year is closer to 11,500. Reaching the level of 12,000 or breaching a new high on the Sensex is a possibility closer to FY19-end.

By then we would have the results of the general elections and if by then there are no surprises then the market would’ve started looking at the current incumbent government's the second term. So, current correction should be seen as more of an opportunity rather than something to stay away from.

It is best to take a top-down while picking stocks rather than a pure bottom-up one. We think we are in a very strong consumption phase of the economy and all proxies to consumption should be bought into.

In line with this thought, we think if FMCG, aviation, and cement sectors are likely to do extremely well. Within that, a Hindustan Unilever, Marico, Nestle, SpiceJet, Heidelberg Cement would do well.

Apart from the above names, I think the metal sector could be a strong out performer to the broader index. And, within this space Jindal Steel and Vedanta could be some of the names that one could look at.

In most bull markets midcaps have outperformed large gaps. This is more the keys in emerging economies. Small caps too have done well but lag midcaps overall. So it’s a prudent strategy to have a slightly higher share in midcaps if one wants to maximize their returns.

This statement would have been true some months ago but not now after the correction valuations are reasonable. Foreign institutional investors will chase growth and stability. India fits that bill and sees no reason why flows will not resume again.

Investors have converged to two of the very large PSUs I.e. SBI and BoB. There is a very little appetite for others. Frauds apart the NCLT process is moving fine and is a positive for space but this only not enough. We might see consolidation of PSU banks in the next term. Till such time triggers are absent.

As of today, it is still posturing by the US and Chinese governments. We do not know the end game yet. There will be some volatility but long-term impact. India is a largely self-contained economy. If anything we should track the INR and Yields which are the bigger drivers of valuations.

MORE WILL UPDATE SOON!!

Nifty likely to hit 11,100 levels ahead of expiry; 5 stocks which could give up to 20% return

The derivative data indicates that bullish scenario is likely to continue with Nifty having multiple strong supports at lower levels around 11000 & 11030 spot.

   

The Nifty is once again trading near all-time highs, and at current levels, derivative data reflects that still there is a lot of short position in Nifty futures and the index calls is outstanding.

Moving forward, we can expect another round of short covering as per current derivative data which could push the index towards 11150-11200 mark this week as the market undertone remains bullish with the support of consistent long buildup and short covering.

The derivative data indicates that bullish scenario is likely to continue with Nifty having multiple strong supports at lower levels around 11000 & 11030 spot.

Currently, Nifty is moving up, with a decent addition in the open interest which indicates strength in the current trend. Option writers were seen active in the recent rally as we have seen put writing in 10800, 10900 & 11000 strikes along with the unwinding in calls.

We have been continuously seeing open interest addition post expiry which indicates long buildup. On the technical front, 11000-10980 spot levels are strong support zone and the current trend is likely to continue towards 11150-11200.

Here is a list of top 5 stocks which could give up to 20% return in the short term:

Automotive Axles Limited: BUY| Target Rs 1980| Stop Loss Rs 1575| Return 15%

The stock has given a breakout above Rs1500 levels in the recent past on the daily charts. Since then it has been consolidating in the range of 1650-1750 and formed a bullish flag formation on the daily interval.

In Tuesday’s session, the stock witnessed a fresh breakout above the pattern formation along with marginal higher volumes. Traders can accumulate the stock in a range of Rs1720-1740 for the target of Rs1980 with a stop loss below Rs1575.

Sasken Technologies Limited: BUY| Target Rs 895| Stop Loss Rs 700| Return 16%

The stock is maintaining its Bull Run and forming higher highs and higher lows on the daily and weekly interval. However, from last three weeks, prices were seen consolidating in range of 720-775 with consistent buying at lower levels.

This week stock has given consolidation breakout above the recent range along with positive divergence on the relative strength index (RSI) and stochastic indicator. Traders can accumulate the stock in a range of 770-785 for the upside target of 895 with a stop loss below 700.

Sterlite Technologies Limited: BUY| Target Rs 464| Stop Loss Rs 340| Return 20%

After recent breakout above 300 levels stock risen sharply and tested 400 levels in short span of time. At current juncture stock has formed diamond pattern formation on daily charts and given breakout above the same this week.

Moreover, a sudden rise in volume along with rising price reflects strength in the current trend. So, traders can accumulate the stock in a range of 385-395 for the target of 464 with a stop loss below 340.

Escorts Limited: BUY| Target Rs 888| Stop Loss Rs 750| Return 11%

The stock has been trading in a rising channel on the weekly interval and has formed higher highs and higher lows. On the daily charts, the stock has retraced back towards its 50-days exponential moving average due to profit booking and took support thereon.

Once again we saw a fresh break above the falling trend line has been seen as once again prices risen sharply above its short-term moving averages. Traders can accumulate the stock in a range of 800-811 for the target of 888 with a stop loss below 750.

Varun Beverages Limited: BUY| Target Rs 800| Stop Loss Rs 635| Return 15%

The stock has risen sharply in the recent past from Rs520 levels to Rs720 levels in a short span of time. Since then, the stock retraced most of the gains and took support around 625 levels.

Due to recent retracement, the stock has formed a bullish flag formation on the daily interval. This week, the upside breakout has been witnessed above the pattern formation along with hefty volumes. Traders can accumulate the stock in a range of 695-710 for the target of 800 with a stop loss below 635.

MORE WILL UPDATE SOON!!