Nifty Outlook for the Week (Dec 18, 2017 – Dec 22, 2017)

Nifty closed the week on positive note gaining around 0.60%.

As we have mentioned last week, that support for the index lies in the zone of 10000 to 10050 where medium term moving averages and low for the month of November-2017 are lying. If the index manages to close below these levels then the index can drift to the levels of 9650 to 9700 where 200 daily moving averages and lows for the month of August-2017 and September-2017 are lying. During the week the index manages to hit a low of 10141 and close the week around the levels of 10333.

Support for the index lies in the zone of 10000 to 10100 where medium term moving averages and break out levels are lying. If the index manages to close below these levels then the index can drift to the levels of 9650 to 9700 where 200 daily moving averages and lows for the month of August-2017 and September-2017 are lying.

Resistance for the index lies in the zone of 10300 to 10400 where break down levels are lying. If the index manages to close above these levels then the index can move to the levels of 10600 to 10700 where trend-line joining highs formed in the month of September-2016 and August-2017 is lying.

Broad range for the week is seen from 10000 on downside & 10600 on upside.

MORE WILL UPDATE SOON!!

Technical View: Nifty forms ‘Bearish Belt Hold’ for second day; keep a stop loss below 10,400

India VIX fell by 0.78 percent to 12.08. India VIX has fallen by 27 percent in the last three sessions and needs to hold below 13-12.50 zones to get the smooth ride.

The Nifty50 which started higher failed to hold gains and corrected throughout the trading day on Thursday and made a ‘Bearish Belt Hold’ kind of pattern for the second consecutive day in a row.

A ‘Bearish Belt Hold’ pattern is formed when the opening price becomes the highest point of the trading day (intraday high) and the index declines throughout the trading day making up for the large body. The candle will either have a small or no upper shadow and small lower shadow.

Formation of Bearish Belt Hold for the second consecutive day in a row suggests a pause in the momentum as index faces stiff resistance around 10,500 levels. The index is trading well above its crucial short-term moving averages, which is a bullish sign.

Even though the index formed a bearish candle for the second consecutive day in a row, traders can still remain long with a stop below 10,400 on a closing basis. Bullish momentum will only continue when index surpasses 10,495 levels.

In Thursday’s price action, Nifty50 opened at 10,473 which was also its intraday high. The bears took control to post the opening tick and pushed the index below 10,450 levels. It closed 3.90 points lower at 10,440.30.

“The Nifty50 registered Bearish Belt Hold formation for the second day in a row as it signed off the day with an extreme rangebound move of 47 points. However, last two session price behaviour is suggesting that market is slowly slipping out of the clutches of bulls,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

Hence, to reclaim their strength back they need to immediately conquer the top of 10,494 levels else bears may tighten their grip over the markets in the near term.

Mohammad further added that traders are advised to remain cautious and maintain a tight stop below 10,400 on closing basis whereas fresh positions should be considered only on a close above 10,494 levels.

On the options front, maximum Put open interest was seen at 10,000 followed by 10,400 strikes while maximum Call OI was seen at 10,500 followed by 10,600 strikes.

Fresh Call writing stood at 10,400 and 10,450 strikes while marginal Put unwinding was seen during the day.

Option band signifies an immediate trading band in between 10,330 to 10,550 zones. The Nifty index remained flattish and was moving in the red and green territory for the most part of the session.

It opened positive but failed to hold its gains and closed the session with the marginal loss of 4 points by forming a Bearish Belt Hold candle for the second consecutive session.

 Nifty has to continue to hold above 10,380 zone to witness an up move towards 10,495 then 10,550 while on the downside supports are seen at 10,330 levels to hold this positive momentum.

MORE WILL UPDATE SOON!!

Multibaggers of 2017! Over 400 stocks created more wealth than you imagined

Among the Nifty constituents, Bajaj Finance rose over 100 percent followed by Indiabulls Housing Finance which rallied 83 percent, and Tata Steel which climbed 81 percent so far in the year 2017.

It is difficult to generate wealth in equity markets especially in the short term but the year 2017 has been a rewarding one for the bulls. The benchmark indices hit fresh record highs with the S&P BSE Sensex hovering near Mount 34K and Nifty near 11K levels.

But, the real winners of 2017 are not the indices, it's individual stocks which stole the show. As many as 470 stocks on the BSE rose up to 1200 percent so far in the year 2017. Three stocks including HEG, Indiabulls Ventures, and SORIL Holdings rose over 1000 percent each in the last 12 months.

As many as 120 stocks rose between 200-900 percent in the last 1 year which includes names like Graphite India, Yuken India, Rain Industries, Venky’s (India), Avanti Feeds, v2 Retail, Bharat Seats, Kolte Patil, and Phillips Carbon etc. among others.

And, as many as 347 stocks more than doubled investors wealth in the same period which includes names like Jaypee Infratech, V-Guard Industries, Lux Industries, Bajaj Finance, Vadilal Industries, Prabhat Dairy, Punjab Alkalies etc. among others.

The S&P BSE 500 index outperformed the S&P BSE Sensex so far in the year 2017 by a good margin which was propelled by gains in small and midcap stocks such as Indiabulls Ventures, Graphite India, Rain Industries, Avanti Feeds, Minda Industries, Future Consumer, DCM Shriram, Vakrangee, Motilal Oswal Financial Services etc. among others.

The S&P BSE Midcap and Smallcap index which has been hitting record highs in the run-up to the year 2018 is likely to continue with the momentum, feel experts but the move would be gradual.

Most experts are looking for a quiet 2018 and await earnings recovery as most of the stocks in the broader market are trading above their long-term averages.

The moves would remain quiet gradual and that would in a way weed out the worse from the good lots. In line with the view on the benchmarks, we feel the broader markets (read as midcaps & smallcaps) would perform with their natural Beta.

As such the midcaps & smallcaps would continue to rally. A gradual rally with intermediate corrections is what we except that would give rise to both sectoral as well as stock specific churning. Thus the worse may get pushed off, while the good amongst the lot would be met with incremental demand.

Benchmark Indices

The S&P BSE Sensex and Nifty50 have rallied by about 26 percent so far in the year 2017. The index managed to climb all wall of worries in the year 2017 and is all set to enter 2018 on a bullish note.

The Nifty might not see a runaway rally in the year 2018 but could well climb up to 12000, suggest experts. “Rerating of the companies is on the cards, and expected NIFTY EPS growth of 15-17% in FY19, a number of 12000 in Nifty 50 by December 2018 is not achievable.

At the same time, instead of looking at Nifty numbers, we are of the view that one should invest in a diversified equity portfolio. Careful stock picking and being overweight on equity as an asset class would yield the investors higher double-digit returns in near future

Among the Nifty constituents, Bajaj Finance rose over 100 percent followed by Indiabulls Housing Finance which rallied 83 percent, and Tata Steel which climbed 81 percent so far in the year 2017.

The S&P BSE Sensex which added over 7000 points so far in the year 2017 could rally marginally by about 2000 points to claim Mount 36K in the year 2018, suggest experts.

As of now, there is a strong support around 31500-31000 levels and as long as these supports hold on monthly closing basis analysts see Sensex heading higher towards 36000, but not without some consolidation.

For Sensex, we are looking at over 36500 levels while we have Nifty Target at around 11,700 zones. We are expecting these levels but we are also expecting a 10 percent correction in valuations prior to that.

 GEPL Capital sees Sensex at 36000 and Nifty around 11,200-11,500. They remain cautious at higher levels, a 10-15% rise from current level may not be an uphill task for the market. The move thus would still remain in line with the long-term averages of growth in the Indian markets,

Among the Sensex constituents, Maruti Suzuki, Tata Steel rose by over 80 percent each, followed by Bharti Airtel which rallied 71 percent, RIL gained 70 percent while HUL rose 59 percent in the same period.

MORE WILL UPDATE SOON!!

Sensex closes flat; but Nifty Midcap at record close, up for 6th consecutive session

The Nifty Midcap and BSE Smallcap indices gained 1 percent each on strong breadth. About two shares advanced for every share falling on the NSE.

 

It was another dull day for the market as equity benchmarks closed flat amid volatility on Thursday, tracking mixed global cues; but the broader markets continued to move northward for sixth consecutive session.

Private banks, auto and FMCG stocks were under pressure while technology, metals and pharma stocks gained.

The 30-share BSE Sensex was down 21.10 points at 33,756.28 and the 50-share NSE Nifty fell 3.90 points to 10,440.30.

The sideways trade along with low volumes is expected to continue for couple of weeks as it is generally a holiday period for foreign investors on Christmas and year-end, experts suggest.

With no major event in sight, keep a close watch on global developments for further cues. Despite recent run-up, midcap and smallcap space have still lot to offer.

The Nifty Midcap index ended at record closing high, up 1 percent and rising 5 percent in six consecutive sessions. About two shares advanced for every share falling on the NSE.

Traders should focus more on stock selection now, Manglik advised. "We may see marginal dip in Nifty in next session and suggest using it as buying opportunity," he said.

DB Realty (locked at 20 percent upper circuit), Unitech (up 12 percent), Sun TV Network (4.5 percent) and Reliance Communications (4 percent) reacted strongly to 2G spectrum case verdict.

Reliance Infrastructure rallied 8 percent on closing the deal for Mumbai power business sale with Adani Transmission that surged 10 percent.

L&T was up 2 percent after Motilal Oswal has maintained buy rating on the stock with a target price at Rs 1,440 (implying 19 percent upside), citing likely pick up in domestic execution in second half of FY18 as GST impact tapered off.

Mahindra and Mahindra fell 3.7 percent as the stock adjusted for bonus share issue in the ratio of one share for every share held. Castrol India and Balkrishna Industries fell 3 percent each, but Vakrangee gained 4 percent as these stocks also adjusted for bonus share issue (1:1).

Maruti Suzuki, Bajaj Finance, HUL, HPCL and Bharti Airtel among others were down 1 percent each whereas HDFC, Infosys, HCL Technologies, Tata Steel, Hero Motocorp and Hindalco were up 0.5-2 percent.

Wockhardt jumped nearly 12 percent as the drug maker will be offering its Waluj facility near Aurangabad, Maharashtra in early 2018 for US FDA inspection.

Reliance Nippon Life Asset Management gained nearly 3 percent after CLSA has initiated coverage with Buy rating and Ajanta Pharma was also up 3 percent after Motilal Oswal has maintained Buy call with increased target price at Rs 1,790 (from Rs 1,606).

Ramco Cement fell 2 percent after Deutsche Bank downgraded the stock to hold from buy and slashed target price to Rs 750 from Rs 790 as weak demand and prices in South Indian affected medium-term outlook.

Pincon Spirit fell 7 percent after market regulator Sebi has ordered forensic audit of the company to check misuse of funds.

On the the global front, Asian markets ended mixed after the passage of a comprehensive US tax bill. European markets stocks were flat with a positive bias at the time of writing this article.

MORE WILL UPDATE SOON!!

Porinju Veliyath Portfolio Holdings:Do you own any??

Fan and follower of Porinju always seek information about buying and selling activity of him. In order to help them here is a comprehensive list of Stocks held by Mr.Porinju.

Porinju Veliyath Portfolio Holdings

Eastern Treads Limited

IZMO Limited

Simran Farms

Stylam Industries

Samtex Fashions

BDH Industries

Emkay Global

Flex Foods

Tara Jewels

Alpa Labs

V2 Retail

ABC India

Linc Pen

Harrisons Malayalam

Palred Technologies

Sahyadri Industries

Archies

Gokaldas Exports

Arvind Infrastructure

Globus Spirits

Tera Software

KNR Construction

Jubilant Life Sciences

Nirvikara Paper Mills

Porinju is indeed successful stock market investor. So question arise that what makes him a successful & billionaire Investor?  How he invest in the stock market?  So, here is some simple points which makes him successful value picker.

Porinju Veliyath Investment Style

Identify and Invest in future multi baggers

Porinju has always identified and invest in future multi-bagger companies. The first example was Geojit Finance. The second example is Shreyas Shipping & Logistics. He invested in this stock in the year 2012. At that time stock was trading at Rs.30.The stock has reached an all-time high on 7th Aug 2015 Rs.839.

Make strategy when to Exit from stock

Porinju exited from Shreyas Shipping by booking profit at the level of Rs.700. After reaching all-time high stock price is now reduced to Rs.271. So, it is important to know when to exit from stock.

Buy lesser-known, high quality businesses to derive maximum portfolio value.

Entire portfolio holding of porinju is full of less –known, high-quality business. E.g No one was aware of stock such as Gokaldas Exports or Nirvikara Paper Mills before he invested.

Invest in companies with clean balance sheet, honest management and clear business visibility

Porinju always invests in companies with a clean balance sheet, honest management, and good business potential. He invested in Geojit Financial Services for these qualities only.

MORE WILL UPDATE SOON!!

Use rallies to build short positions; 4 stocks which can give up to 18% return

Overall, we expect Nifty to trade in a broad range of 10,000-10,400 levels where any pullback towards 10,350-10,400 can be used to exit from trading longs and initiating fresh shorts.

 

The Nifty has formed a downward sloping channel formation on a daily chart and recently it saw sharp reversal from the upper band of the channel formation. Looking at the daily chart, we are seeing lower highs & lower lows on Nifty as well as on the daily RSI (14) momentum indicator.

At this juncture, the index is finding support near the 61.8 percent retracement of its entire move from the bottom of 10,033 to the top of 10,329 which is likely to be taken out in a coming trading session as we are expecting a range shift on a daily chart.

Going forward, we maintained our sideways to bearish view on the index and expect Nifty to correct towards 10,050-10,000 level; hence, positional traders are advised to use any meaningful bounce if any,

On the higher side, 10,330 / 10,407 zone has a cluster of resistance and as long as the index is trading below this zone our view will remain cautious in the near term.

If we analyse option data than that also indicates the same broad range for Nifty. On lower side maximum put writing at 10,000 strike option will act as strong support zone whereas call writing at 10,400-10,500 strike options continued to be a supply zone for this series.

Overall, we expect Nifty to trade in a broad range of 10,000-10,400 levels where any pullback towards 10,350-10,400 can be used to exit from trading longs and initiating fresh shorts.

Here is a list of top 4 stocks which can give up to 18% return in 15-21 sessions:

Sun Pharma: BUY around Rs514| Target Rs610| Stop loss Rs460| Time frame 15 to 21 sessions| Return 18%

Looking at the daily chart, we are seeing a formation of a Bullish divergence and the impact of said pattern was seen last week when the stock rebounded sharply towards Rs572.

Subsequently, the bears tried to pull the stock lower but it bounced back from the support near 50% retracement of its entire swing move. The daily RSI (14) also found support near 40 levels.

Hence, we expect this stock to see a decent up move in the coming week and therefore we recommend traders to buy this stock at the current level of Rs514 with a price target of Rs610. A Stop loss should be placed below Rs460.

ONGC: BUY around Rs185 – 182| Target Rs205| Stop loss Rs175| Time frame 15 to 21 trading sessions| Return 10%

After taking a support near the daily 89-EMA, the stock witnessed a decent buying interest. On a daily chart, the RSI (14) took support near 40 and started heading northward.

On the daily chart, 9-45 EMA is still positive indicating the current trend is still up. Also, the rising crude oil price is a favorable for upstream companies.

Thus, we advocate traders to buy this stock in a range of Rs185 – 182 with a price target of Rs205. A stop loss should be placed near 175.

Can Fin Homes: SELL around Rs460 to 465| Target Rs410| Stop loss Rs481| Time frame 15 to 21 trading session| Return 10.8%

The stock has formed Lower Highs & Lower Lows on the daily charts. Recently, the stock saw a pullback from the low of Rs431 but saw strong resistance near the daily 45-EMA and formed a triangle pattern.

In Thursday’s trading session, stock confirmed its breakdown from triangle pattern. The 9-45 EMA on price is negative indicating the current trend is down.

Hence, we suggest traders to build a short position in Canfinhome around 460 /465 with a price target of 410 and stop loss placed above 481.

Indiabulls Housing Finance: SELL around Rs1190 – 1200| Target Rs1100| Stop loss Rs1230| Time frame 15 to 20 trading session| Return 7.5%

After witnessing a sharp rally, the stock breached the Higher Top Higher Bottom sequence on the daily chart and thereafter it is consolidating in a narrow range since past several days.

The 9-45 EMA has signaled negative crossover and with this stock also broke the rising trend line on daily chart. Looking at the placement of candlestick pattern on the daily chart, we expect further weakness in this counter hence one can take a short position in a range of 1190 – 1200 with a price target of 1100. Stop loss should be placed at 1230.

MORE WILL UPDATE SOON!!

Outcome of Exit Polls in Gujarat among top 5 factors cheering Sensex, Nifty

Frontline indices witnessed a gap-up opening, with the Sensex gaining over 300 points in the first few minutes of trade, while the Nifty managed to reclaim 10,350 mark.

   

The Indian market on Friday cheered the exit poll outcomes for Gujarat and Himachal Pradesh Legislative Assemblies, which predicted a comfortable victory for the ruling Bharatiya Janata Party (BJP).

The positivity in the market is on the back of assurance of a political stability, which is key to passing of important reforms for the economy at the State and Centre levels.

Frontline indices witnessed a gap-up opening, with the Sensex gaining over 350 points intraday in the first few minutes of trade, while the Nifty managed to reclaim 10,350 mark.

Exit Polls suggest victory for BJP

Exit polls released by various news organisations and survey agencies on Thursday revealed that the ruling-Bharatiya Janata Party (BJP) is likely to retain power in Gujarat following the 2017 assembly election.

While most polls suggested that the Congress had improved its tally in north Gujarat, the ruling party continues its dominance in south Gujarat.

In the 2012 assembly polls, the BJP won 115 seats, just short of the two-thirds mark, while the Congress won 61 seats in the 182-member assembly. BJP and Congress had a vote share of 47.90 and 38.90 percent, respectively. Former chief minister Keshubhai Patel's Gujarat Parivartan Party (GPP), which was hoping to dent the BJP, ended up winning only two seats. The party was later merged with the BJP. The Nationalist Congress Party (NCP) and the Janata Dal (United) bagged two and one seat respectively.

Meanwhile, exit polls released by various news organisations and survey agencies on Thursday revealed that the Bharatiya Janata Party (BJP) is set to end Congress' rule in Himachal Pradesh. The poll results also indicated that the BJP would win with a 51 percent vote share in the Himalayan state, while Congress's vote share would be 38 percent. Other candidates will take home the remaining 11 percent votes. The agency said that the final result could be somewhere between plus or minus seven in terms of the seat share and three percent in terms of the vote share.

Technical Breakout

Ahead of the announcement of exit polls on Thursday, the Nifty ended above 10,250, making a Hammer-like pattern on the daily charts.

A Hammer which is a bullish reversal pattern is formed after a decline while Hanging Man is a bearish reversal pattern. In this pattern, market witnesses a significant selloff towards opening but manages to recoup some of the losses and closes near the opening level.

Formation of a bullish candle after two successive bearish candles suggests that market is now factoring in a favourable victory of BJP in the upcoming poll results next week.

For the bullish momentum to continue, experts had suggested that the index has to surpass its crucial resistance level placed around 10,350 levels. In this case, the Nifty has managed to surpass that in the opening tick, setting the course for the market ahead.

Booster from US Fed -- no aggresive rate hikes in 2018

The US Federal Reserve, in its recent policy meeting, announced that there could be no aggressive rate hikes in the following year, leading to some relief among emerging markets.

The US central bank came through on a widely expected interest rate hike on Wednesday following its two-day policy meeting and sharply raised its economic growth forecast for 2018.

In their decision, the central bank policymakers mostly followed the script, though they did indicate that one less hike is on the way for 2019. Two Fed presidents voted against the increase — Charles Evans of Chicago and Neel Kashkari of Minneapolis.

The move will push the target range to 1.25 percent to 1.5 percent. The rate is pegged to a wide variety of debt instruments, such as credit cards and adjustable-rate mortgages. The Fed has persevered in hiking rates gradually, with this week's raise being the third quarter-point move in 2017. Projections for 2018 remained unchanged at three more increases.

Global brokerages betting on macro visibility

On the macro front, market experts are looking forward to improving economic and macro scenario. This, if transpired, would lead to more upward moves on the market going forward.

The Indian division of Credit Suisse sees India’s macro economic visibility improving in 2018. However, the growth prospects for the economy are likely to remain weaker than currently expected, according to Neelkanth Mishra, Managing Director and India Equity Strategist at Credit Suisse. "Structural reforms have weakened visibility on most macroeconomic parameters," Mishra said.

“We have long considered India as a ‘house under renovation’. Structural reforms such as the Good and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC) and the setting up of Real Estate Regulators (RERA) in states while structurally positive, have introduced significant uncertainty around growth, fiscal deficits, inflation, interest rates and banking system health,” he added.

Fundamentally, we are turning a corner in terms of economic and earnings growth, Pramod Gubbi, Head of Equity at Ambit Capital, told CNBC-TV18 in an interview. He expects December quarter earnings to see a pick up on the back of a recovery in environment and a weak base from the last quarter. “In terms of sectors, consumer discretionary and IT could show improvement in terms of growth,” he told the channel. Overall, he expects around 15 percent growth in earning for FY19.

Oil stable on tighter market

After witnessing a sudden spike to USD 65 levels, oil prices seem to have stabilised by now.

Oil markets were stable on Friday as the Forties pipeline outage in the North Sea and the ongoing OPEC-led production cuts supported prices, while rising output from the United States kept crude from rising further.

US West Texas Intermediate (WTI) crude futures were at USD 57.15 a barrel at 9:40 hours IST, up 0.19 percent from their last settlement.

Brent crude futures, the international benchmark for oil prices, were at USD 63.26 a barrel, down 0.08 percent from their last close.

Traders said markets were overall well supported by efforts led by Organization of the Petroleum Exporting Countries (OPEC) and Russia to withhold supply to prop up prices.

MORE WILL UPDATE SOON!!

Global brokerages see up to 12% rise in Sensex in 2018; more than 30 stocks to bet on

Global brokerages such as BofAML, Morgan Stanley, Credit Suisse, and BNP Paribas see Indian market to touch fresh record highs in the next calendar year.

 

The year 2017 has been a blockbuster year for India markets with benchmark indices breaking above key resistance levels and the year 2018 is unlikely to disappoint investors. The S&P BSE Sensex which has already rallied over 25 percent could well see another 12 percent rally from current levels.

Global brokerages such as BofAML, Morgan Stanley, Credit Suisse, and BNP Paribas see Indian market to touch fresh record highs in the next calendar year.

BNP Paribas has the most aggressive target on Sensex among all the other global investment banks’ which have come out with their strategy reports. BNP Paribas maintains its overweight stance on Indian markets and sees the S&P BSE Sensex heading towards 37,500, which translates into an upside of nearly 12 percent from current levels.

The global investment bank said that it wants to play the upcoming recovery and benefit from the impact of the previous year’s policy measures, and we like the ease of stock selection. India suffered from reform-related economic destruction, but a recovery seems clear underway.

Morgan Stanley:

The global investment bank in its most bullish scenario see Sensex climbing Mount 40K by December 2018 if earnings growth accelerates to nearly 20 percent. A combination of supportive global growth, improving capex, fiscal spending and a buoyant consumer augur well for growth in the year 2018.

Morgan Stanley introduced its December 2018 Sensex target at 35700 (base case). In the base case scenario which has a probability of 50 percent, the BSE Sensex would trade at 15x one-year forward earnings, which is below its historical average.

In the bull case scenario which has a probability of 30 percent, the S&P BSE Sensex could rally towards 41,500 on better-than-expected on policy measures as well as global factors. The earnings growth would also accelerate to 19 percent in FY2018and 27 percent in FY2019.

Credit Suisse:

As the 2019 general elections get closer, state elections are likely to get more market attention. This has limited direct economic impact, particularly after the budget is presented, but changes in market sentiment may drive volatility.

The market as a whole is not expensive on a relative basis, and while cuts should resume, we could still see double digit EPS growth in FY19. Top outperformers include names like SBI, ONGC, Tata Steel while Bajaj Finance, UltraTech, and Dr Reddy’s could underperform.

Nomura:

Saion Mukherjee of Nomura said the research house is bullish on India Equities with Nifty December 2018 target of 11,880. Their top stock picks are Reliance Industries, GAIL, HDFC Bank, SBI, Shriram Transport, Maruti Suzuki, M&M, Ashok Leyland and L&T.

Business is on the cusp of an upcycle which will drive strong earnings growth as corporate earnings-to-GDP ratio is at its lows, with significant contraction in margins and return on equity.

Nomura is overweight on financials, energy, infra/construction and healthcare while underweight sectors include IT, consumer staples, utilities & cement.

B0fAML:

The global investment bank sees the index slipping towards 32K towards the end of the next. BofAML said that bank said that it arrived at the valuations for the Sensex by using top-down estimates for earnings growth i.e. 15 percent and a 16.5x forward P/E multiple.

The S&P BSE Sensex currently trades at 18.5x forward which is well above its historical average of 15.3x. Large positive returns from current levels are only possible if the current elevated P/E multiple sustain so that the growth in earnings can drive stock prices. But, downgrades to estimates are still likely in 2018.

MORE WILL UPDATE SOON!!

The year 2018 will be all about individual stocks; 6 sectors looking attractive

The market is unlikely to break out in a hurry and sectors which did well so far could underperform in the next one year, while the beaten-down sectors such as PSU banks, roads, metals, industrials etc. will remain in demand in the next 6-9 months.

   

The S&P BSE Sensex rallied by about 25 percent so far in 2017, largely on the back of P/E re-rating while earnings stayed flat. Going into 2018, earnings are likely to pick up and P/E multiple could see de-rating, Manish Sonthalia, Head Equities- PMS at Motilal Oswal AMC said in an interview with CNBC-TV18.

The market is unlikely to break out in a hurry and sectors which did well so far could underperform in the next one year, while the beaten-down sectors such as PSU banks, roads, metals, industrials etc. will remain in demand in the next 6-9 months.

Here is a list of top 6 sectors which are looking attractive:

NBFCs which outperformed benchmark indices in the year 2017 may underperform in the next 12 months. “We are going to see rate increase sometime in FY19 and rates are going to harden with inflation and twin deficit coming back could weigh on NBFCs,” said Sonthalia.

Dairy:

The dairy theme is likely to do well given the fact that PM Modi plans to double the farm income in the next 3-4 years. In the dairy sectors, the focus will be on companies who are selling liquid milk rather than value-added products because the work capital cycle and cash conversion cycle is much more favourable in liquid milk.

Midcap IT & Pharma:

In the Midcap IT segment, Sonthalia likes L&T Technology Services and in terms of pharma space, we are betting on Ipca Laboratories, and Alkem Laboratories.

Gas stocks:

We are positive on City gas distributors — Indraprastha Gas Ltd (IGL) and Mahanagar Gas Ltd (MGL). The economy is moving towards a gas economy which augers well for both the stocks. The valuations might look stretched but with PNGRB having a chairman, decision on new notified will come soon which will be positive for both these companies.

Real Estate:

Real Estate is entering into interesting times going into the future. The whole retailing space and residential housing space is witnessing a shift from unorganised to organised. The known industry plays are likely to see a bigger traction in terms of volume size as opposed to lesser known ones.

Jewellery:

In the jewellery space, Sonthalia likes Titan Company Ltd. The company is a major thematic play on the unorganised shifting to the organised. The hyper growth is here to stay.

MORE WILL UPDATE SOON!!

Volatility grips Dalal Street as Sensex slips 174 pts ahead of Fed rate decision

Investors could be cautious ahead of key events such as US Fed meet outcome, along with Gujarat elections’ second phase and the following opinion polls which will be out on Thursday.

 

In what could be termed as a volatile day of trade on D-Street, benchmark indices witnessed wild swings in both directions, before ending the day on a weak note. Investors could be cautious ahead of key events such as US Fed meet outcome, along with Gujarat elections’ second phase and the opinion polls which will be out on Thursday. Sentiment could also have been hit on the back of subdued economic data.

A gap-down opening was seen on the Indian market, but the index soon trimmed some of those losses to trade rangebound in the afternoon. But things took a turn for good, when a rally in banks, along with other frontline indices helped them trade positively. Sensex gained around 176 points intraday, before witnessing a sudden U-turn and falling over 200 points intraday in the penultimate hour of trade. The Nifty, too, had gained around 59 points intraday.

The Sensex closed down 174.95 points or 0.53 percent at 33053.04, while the Nifty was down 47.20 points or 0.46 percent at 10193.00. The market breadth was negative as 944 shares advanced, against a decline of 1718 shares , while 150 shares were unchanged.

Kotak Mahindra Bank, ONGC, HPCL and IOC were the top gainers, while BHEL, Tata Motors DVR, Vedanta and Cipla lost the most.

Nifty Midcap was down 1 percent. About two shares declined for every share rising on the NSE. All sectoral indices ended in red. Metal, pharma, realty and PSU bank fell the most, down 1-2 percent, followed by auto, FMCG and IT.

It was another day of losses on the bourses as key indices started the day on a subdued note and traded in the negative zone on mixed Asian cues and data showing a surge in India's consumer price inflation and a moderate growth in industrial production. This becomes a very tricky situation for the Central Bank to handle. While lower interest rates in the economy should likely give a boost to economic growth, higher inflation discourages the Central Bank to reduce rates as it might further spike inflation. This means that the markets could be more volatile in the near future as indecisiveness dominates sentiment. Both the benchmark Sensex and the Nifty finally closed the day with losses.

Meanwhile, oil stocks IOC, HPCL, BPCL bounced back, up 1.5-2 percent, after Brent crude cooled off after hitting USD 65 per barrel in the last two days.

Shree Cement, UltraTech Cement, JK Lakshmi Cement, JK Cement and Prism Cement gain 1-6 percent post SC order that allowed the use of petcoke.

Canara Bank, Allahabad Bank, LIC Housing Finance, Manappuram Finance, HDIL, DLF, Peninsula Land, Indiabulls Real Estate, Voltas, Havells, Petronet LNG, Century Textiles, Tata Elxsi, Religare Enterprises, HEG, Graphite India and Rain Industries were down 1-5 percent.

Bharti Airtel shares closed over 1.3percent lower after gaining nearly 2 percent intraday after the company decided to sell 20 percent stake in its DTH arm to US private equity firm. The rally had spilled over to Dish TV as well, which gained 4 percent, before falling around one percent.

InterGlobe Aviation shares fell 4 percent on equity dilution by promoter entities through offer for sale that opened for subscription. Two promoter entities of the IndiGo owner planned to offload shares worth at least Rs 1,245 crore through the offer for sale route on Wednesday and Thursday.

JB Chemicals & Pharmaceuticals ended flat, before gaining 3 percent on receiving approval from the US health regulator for anti-hypertensive drug.

Rico Auto Industries shares rallied more than 3 percent intraday Wednesday on signing a joint venture agreement with Singapore-based company. The stock ended 0.20 percent higher.

Markets continue to look weak overall with the real estate sector beginning to sell off too; what went up the highest in the preceding rally, looks to be correcting now. Ahead of the Fed policy decision tonight and the Gujarat exit polls soon after, we recommend a wait-and-watch policy at this juncture with a bias on the short side.

MORE WILL UPDATE SOON!!