Top 10 stocks which rose up to 350% in 2017 can still deliver up to 54% upside in 2018

Taking a moderate stance on the backdrop of volatile year ahead for market in 2018, Rohira expects Nifty index to trade at around 11,801-11,906 target level with upside of about 14 percent by the end of December 2018.

The year 2017 was a fantastic for equity market as the 50-share NSE Nifty shot up 28 percent, largely driven by liquidity following likely continuity in economic policies, government reforms, improvement in corporate earnings and positive global environment.

Even the broader markets showed smart returns in the year as the Nifty Midcap surged 45 percent, outperforming frontline indices. The rally also created lots of multibaggers during the year.

The buoyancy seen in the year going by is likely to continue in 2018 as well, though returns may be less than 2017 as eight assembly elections, last full-fledged Union Budget ahead of general elections 2019 and up-down in crude oil prices may cause volatility, experts suggest.

The confidence of the current government to execute a structural reform on broad level has leverage the investor with long-term optimism in the Indian equity market. The rally witnessed during the current year certainly paved buoyancy with similar expectation for next year.

Taking a moderate stance on the backdrop of volatile year ahead for market in 2018, he expects Nifty index to trade at around 11,801-11,906 target level with upside of about 14 percent by the end of December 2018.

Experts believe the domestic liquidity is expected to remain strong.

"With lack of any material returns, equities are the only asset class left, with only about 4-5% of total population having invested in equities, this trend is expected to last over the medium to long term. Hence, domesic liquidity should remain buoyant," Vinit Bolinjkar, HOR at Ventura Securities said.

Here is a list of stocks which rose up to 350% in 2017 can still deliver up to 54% upside in 2018:

Brokerage: Motilal Oswal

M&M Financial Services | Rating - Buy | Target - Rs 562 | Returns - 20%

Being one of the most widely levered NBFCs to the rural economy, Mahindra & Mahindra Financial Services is witnessing a clear turnaround in both growth and asset quality, with two successive normal monsoons (2016 & 2017) as well as the government’s focus on rural spending.

Over the past five years, MMFS has almost doubled its branch count – however, most branches are yet to reach full potential. As the company looks to sweat its branch potential with an improving business environment, we expect 15-18% AUM CAGR over the medium term. In addition, credit costs are expected to decline ~100bp over the medium term from around 3 percent witnessed in FY17.

With the recent capital raise of INR21b, MMFS is well equipped to support strong loan growth over the medium term. We increase FY18-20 BVPS estimates by 15-20 percent, while our EPS estimates are largely unchanged. We roll over our numbers to FY20E to arrive at a target price of Rs 562 (SOTP-based). BUY.

ONGC | Rating - Buy | Target - Rs 227 | Returns - 21%

Current price for gas production from difficult fields stands at USD 6.3/mmBtu (GCV) versus USD 2.89/mmBtu for APM gas. Gas production from S1/Vashistha and KG-DWN-98/2 would fetch premium pricing, benefiting profitability. Cost-control measures are also yielding results, in our view. Using Brent of USD 60 per barrel, we estimate EBITDA of Rs 74,300 crore and EPS of Rs 22.7.

The ongoing valuation exercise for HPCL is a cause of concern. An unjustified premium would be a double-whammy through holding company discount that investors would attach to ONGC’s stake in HPCL.

The stock is trading at 8.2x its FY19 EPS. We value the stock at Rs 227, valuing it at 10x average FY19-20 EPS, adjusted for other income. We reiterate Buy rating on the stock. Our valuation includes a negative value of Rs 4 for its stake in the Mozambique block. We also estimate that every USD 5 per barrel would result in around 10 percent change in EPS.

Brokerage: Kotak Securities

Dilip Buildcon | Rating - Buy | Target - Rs 1,217 | Returns - 31%

Dilip Buildcon is one of the leading private sector road-focused engineering procurement construction (EPC) contractors in the country. With a strong order book providing a revenue visibility of next 2.5 years, company is all set to bag the upcoming road awards with its superior balance sheet strength.

Post divestment of its road assets, DBL has transformed itself into a complete EPC player. Execution pace ahead of industry peers, strong margins coupled with lower debt and refinancing of interest rates are likely to be the key drivers for the stock.

Stock is currently trading at 16.5x/15.3x P/E on FY19/20 estimates and we recommend BUY on the stock with a price target of Rs 1,217 based on 20x FY20 earnings. We believe that the momentum in the stock is going to be maintained going forward too led by order inflow announcements, rating upgrades as well as refinancing of interest rates.

Key risk to our recommendation would come from lower than expected order inflow or slower rate of execution.

Vascon Engineers | Rating - Buy | Target - Rs 60 | Returns - 30%

Vascon Engineers has presence in construction and development of residential and commercial real estate projects with a history of over 25 years. After having a rough patch between FY13 to FY15, the company has embarked on a decisive restructuring exercise.

We feel the company could be a good turnaround story in FY19E with focus on affordable housing in both its EPC and real estate business.

The four pronged strategy of turnaround are: 1) Focus on increasing the order book of EPC business. The company has capability to execute 8 mn sq ft of projects/Rs 1,000 crore in value per annum as compared to potential revenue of around Rs 300 crore in FY18. It has already increased its EPC order book from Rs 520 crore in Mar’17 to Rs 720 crore at the end of first half of FY18; 2) Reviving the real estate business under the new CEO of Real estate division, by focusing on affordable housing in a big way; 3) Liquidation of non-core investments to the tune of around Rs 200 crore in its subsidiaries & other businesses to fund future growth plans; and 4) Exiting loss making services business in its 85 percent held subsidiary called GMP Technical Solutions.

This has the potential to swing PBT by Rs 10-15 crore between FY17 to FY19. On an overall basis, we expect company’s revenue and earnings to grow a CAGR of 26 percent and 231 percent, respectively between FY17-20. We expect 1257 bps improvement in EBITDA margins in FY17-20. Based on detailed working of individual businesses, we arrive at a SOTP price target of Rs 60. We initiate coverage on the stock with a BUY recommendation and potential upside of 30 percent.

Brokerage: ICICI Securities

Sandesh | Rating - Buy | Target - Rs 1,585 | Returns - 18%

We had come out with an I-direct Instinct on Sandesh in March, 2017. We reiterate that our upside thesis was based on Gujarat state elections given the company’s presence in the state. Moreover, we note that despite the recent run-up, the company is available at attractive valuations of 10x FY19 earnings despite a healthy growth matrix.

Sandesh has showcased decent growth in the regional print space at 16.7 percent CAGR over FY14-17 coupled with strong cash flow generation. The near term growth trigger in the form of Gujarat elections would boost the ad revenue growth in Q3FY18. Given the robust growth potential, we assign P/E multiple of 12x on FY19E basis (10-15 percent discount to other print players). Hence, we revise upward our target price to Rs 1,585 per share.

SKF India | Rating - Buy | Target - Rs 2,225 | Returns - 27%

SKF is the leader in the Indian bearing market with around 28 percent share. We believe the company is stepping on the growth trajectory due to traction in its key segments, auto and industrial. SKF derives around 54 percent sales from the automotive segment and around 46 percent of sales from the industrial segment.

In the auto segment, the company is witnessing improved demand in HUB-3 bearings with the Indian auto industry moving from first generation bearing to third generation bearing. With a pick-up in auto sales, we expect SKF’s manufactured product (auto) sales to exhibit 11.2 percent CAGR till FY20.

The industrial segment is also likely to perform well due to a pick-up in import substitution in this segment. This coupled with a pick-up in the railway and metro segment is likely to help the company deliver revenue growth at 11.6 percent CAGR in FY17-20. To cater to increasing demand, the company has planned a capex of Rs 80-100 crore over the next two years.

Overall, we expect SKF to deliver sales and PAT CAGR of 11 percent and 13.6 percent, respectively, in FY17-20. We value the company at 32x P/E on FY20E EPS of Rs 69.6 to arrive at a target price of Rs 2,225 per share.

Brokerage: BP Equities

GMM Pfaudler | Rating - Buy | Target - Rs 1,106 | Returns - 54%

GMM Pfaudler has a leadership position in GL reactors with strong pricing power in the domestic market. The company is well positioned to witness steady revenue and profitability growth going forward in the business through brown field expansion and higher capacity utilization on the back of steady domestic demand and outsourcing opportunity from the Parent (Pfaudler Inc) to add fuel to GL business growth.

GMM is likely to leverage its deep rooted relationship with GL customers to cross sell its non-GL equipment. We estimate revenue/EBITDA/PAT to clock 18.6/27/24.8 percent CAGR during FY17-20.

At the current market price (of Rs 717) the company is trading at 20.6x its FY19 EPS of Rs 34.9 and 16.2x its FY20 EPS of Rs 44.2. We believe with the market leadership positioning in industry, strong brand name, sticky client base, superior growth in NGL and thus deserve premium valuation.

We initiate coverage on the stock & recommend ‘BUY’ rating by assigning 25x to its FY20 earning. We arrive at a target price of Rs 1,106 (potential upside of 54 percent from CMP) for an investment horizon of 15-18 months.

Brokerage: Reliance Securities

Asian Granito | Rating - Buy | Target - Rs 701 | Returns - 30%

Asian Granito is the third largest listed tile player in India with total manufacturing capacity of 32msm. Over the past decade and half, the Company has aggressively increased its capacity from 2,500 square meter per day to 100,000 square meter per day on the back of increasing own manufacturing capacities, joint ventures and outsourcing.

Going forward, we expect the growth momentum to accelerate further owing to faster formalisation of industry post GST roll-out, increasing focus on premiumisation, higher A&P spend and enhanced distribution footprint.

We expect Asian Granito to report revenue, EBITDA and net profit CAGR of 16 percent, 22 percent and 40 percent, respectively through FY17-20. Considering visible improvement in growth trajectory coupled with attractive valuations of 15.2x FY20 earnings (45 percent discount to market leader Kajaria), we initiate coverage on the stock with a target price of Rs 701, which implies 30 percent upside from the current levels.

Brokerage: SMC

Marico | Rating - Buy | Target - Rs 390 | Returns - 23%

Marico's principal products include edible oils and value added hair oils. The Company's geographic segments include India and International, which includes primarily the Middle East, The South Asian Association for Regional Cooperation (SAARC) countries, Egypt, Myanmar, Malaysia,

South Africa and Vietnam. It offers various brands in the categories of hair care, skin care, health foods, male grooming and fabric care.

Factors such as strong brand equity in its flagship brands, extension into higher growth and underpenetrated categories, revival in discretionary demand and improving economic scenario and unorganised market are likely to benefit Marico.

Thus, it is expected that the company would see good growth going forward and the stock will see a price target of Rs 390 in 8 to 10 months time frame on a target P/E of 22.65x and FY19 earnings of Rs 7.8.

Essel Propack | Rating - Buy | Target - Rs 361 | Returns - 23%

Essel Propack (EPL) is a leading manufacturer globally of laminated plastic tubes and laminates. Its products are extensively used in the packaging of products across categories such as beauty & cosmetics, pharma & health, foods, home and oral care. The FMCG and pharma industry which consume the Company’s products continue to offer sustained growth opportunity for the Company.

Driven by innovation and technology, the company continues to grow offering smart packaging solutions to replace traditional packaging forms like bottles, metal and plastic tubes both in existing categories and in newly emerging categories and applications from food to pharmaceuticals to lifestyle.

Thus, it is expected that the company would see good growth going forward and the stock will see a price target of Rs 361 in 8 to 10 months time frame on a target P/E of 22x and FY19 earnings of Rs 16.4.

MORE WILL UPDATE SOON!!

Staying with winners! Nearly 40 stocks rose 30-60% as Sensex rallies from 33000-34000

Almost 40 stocks rose in the range of 30 percent to 60 percent from October 25 to December 22nd, 2017 which include names like 8K Miles (up 67%), Minda Industries (up 62%), Praj Industries (up 59%), Polaris Consulting (up 59%), HEG (up 49%) etc. among others.

The S&P BSE Sensex created history on Tuesday as it surpassed Mount 34000 for the first time to hit a fresh record high of 34,005.37 while the Nifty50 rose to a lifetime high of 10,515.10.

The S&P BSE Sensex rallied from 33000 on October 25 to 34000 on 26 December, a rally of 1000 points or nearly 3 percent. But, as many as 347 stocks have positive returns in the similar period up to 60 percent in the S&P 500 index.

Almost 40 stocks rose in the range of 30 percent to 60 percent from October 25 to December 22nd, 2017 which include names like 8K Miles (up 67%), Minda Industries (up 62%), Praj Industries (up 59%), Polaris .

  

But, not every stock rallied. As many as 153 stocks gave negative return up to 26 percent in the S&P 500 index from the period 25 October to 22nd December 2017 which include names like Bank of Maharashtra (down 26 percent), Bharti Infratel (down 19 percent), OBC (down 17 percent), Central Bank of India (down 17 percent), SREI Infra (down 16 percent) etc. among others.

The index rose above Mount 33000 with a gap on 25 October and since then it has been a turbulent run for the index. The index created two bottoms 15 November and 6th December before bouncing back which closely resembles a double bottom structure.

The index is now trading above its key short-term moving averages and looks set to hit fresh record highs in the year 2018.

A poll conducted by the Moneycontrol.com highlighted that index is on track to hit fresh record highs up to 37000-38000, but the important part is that 34000 could be the base for markets.

As many as 62 percent of the poll respondents feel that the S&P BSE Sensex is on track to stay above Mount 34000 throughout the year 2018 and could even touch 37000-38000.

Almost 15 percent of the respondents feel that it will hover in the range of 33000-33500 while the rest 8 percent feel that it will move in the range of 33500-34000

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 10 percent from current levels.

MORE WILL UPDATE SOON!!

Happy New Year 2018! Nifty likely to climb Mount 11K by December-end: Poll

Experts believe that Nifty is likely to scale Mount 11K in the year 2018.

After a blockbuster 2017, all eyes are on the year 2018 which promises to be eventful and another year of record highs for equity markets.

 

The Nifty50 rallied from 8,185 levels recorded on 30 December 2016 to 10,493 on 22nd December 2017, a gain of almost 2,300 points or 28 percent.

But, the rally is not over yet as most experts believe that Nifty is likely to scale Mount 11K in the year 2018, according to a poll conducted by Moneycontrol.com.

As many as 46 percent of the poll respondents feel that the Nifty50 is likely to scale above 11000 by 2018 December-end, while the rest 40 percent feel that it would hover in the range of 10,000 to 11,000.

One participant feels that the Nifty has the potential to climb Mount 12K or remain in the range of 11500-12000. Not everyone is optimistic about the year 2018, one of the analysts polled by Moneycontrol said that index could well trade below 10,000 towards the end of 2018.

The rally in the year 2017 has been largely driven by expansion in P/E multiples with earnings growth faltering due to the adverse impact of demonetistion and implementation of GST.

Going ahead, we see limited scope for multiple expansion from here and the baton to take markets ahead would have to be passed on to earnings growth in 2018.

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 10 percent from current levels.

One big worry for the analyst’ community going forward is growth in earnings for India Inc. The September quarter results were largely in-line with estimates which is a good sign but December quarter results will dictate the trend for markets in the first month of 2018.

Most analyst’ polled by Moneycontrol feel that earnings recovery is in place as 60 percent of the respondents feel that improvement in the corporate earnings growth should start happening from December quarter while the rest 40 percent are not that convinced.

Earnings recovery is one of the crucial factors which is likely to drive the trend for the markets. Even though some analyst feel that a correction could come in if earnings fail to bounce back while others feel that a double-digit recovery is in sight.

“In the long-term, the equity market is a mirror of earnings growth. During last 7-8 years, corporate earnings growth was 7-8 percent CAGR and Sensex delivered similar returns,” Rajesh Kothari - Founder and Managing Director of AlfAccurate Advisors told Moneycontrol.

“During next 3 years, as earnings growth improves, the market has a potential to deliver double-digit returns - compared to fixed income which gives 4-5% net of tax returns,” he said.

Commenting on the upcoming Budget, most analyst preferred to stay away but the general consensus is that nobody wants the government to present a populist Budget 2018.

The work on Modi Sarkar's last full Budget has already begun and after a close encounter in the Gujarat Assembly elections, the talk of populist Budget has gathered steam.

As many as 53 percent of the analysts’ preferred not to comment on the Budget while 27 percent feel that it will be a populist one and the rest 20 percent want to go with a reformist Budget.

“We do not believe that the government will present a populist budget. This government has been prudent about fiscal spend so far and we believe that the same will continue,” Prasun Gajri, Chief Investment Officer, HDFC Life told Moneycontrol.

“However, it is possible that the pace of consolidation may differ from what was presented earlier. This will largely be led by bank recapitalization and the teething issues related to GST implementation,” he said.

One big worry which could become a concern for the Indian market is rising crude oil prices. Right now, the Brent crude is hovering near USD 64, up 12 percent approx. on a year-to-date (YTD) basis.

The price per barrel of Brent crude crossed USD 60 mark this month, against USD 40 a year ago but it is still well below the USD 115 peak reached in 2011. A high crude oil price increases the risk of higher current account deficit.

Almost 80 percent of the respondents are of the view that if the crude inches towards USD 65-70/bbl if will hamper bull run for Indian equity markets as now the Street might have to deal with other macro challenges.

MORE WILL UPDATE SOON!!

Options writing suggest higher levels in expiry week: 5 stocks which can give up to 25% upside

The Nifty closed at a new all-time high on Friday and seen small consolidation at breakout levels. Crossing and sustaining above 10500 levels on a tradable basis, the index can be expected to rally towards 10700 levels and then 10840 odd levels on the upside.

   

The Nifty50 hit a new high of 10,501 in closing moments of trade on Friday to settle at 10493 levels, up by 1.6 percent for the week.

Benchmark indices have been sideways and are now trading in a narrow range for the last three trading sessions. But, the broader markets witnessed action last week with the BSE Mid and Small cap index gaining 3.5 percent and 4.5 percent respectively for the week.

Looking at the price movement of the last couple of months’, the price has broadly traded in a range of 10,500-10,000 odd levels and formed W shaped pattern which is likely to see a breakout on the upside.

In Nifty options, 10450-10500 Puts have seen significant OI additions suggesting writing activity, while 10400 and higher calls have seen unwinding suggesting option traders are looking for the market to move higher in the expiry week.

The Nifty closed at a new all-time high on Friday and seen small consolidation at breakout levels. Crossing and sustaining above 10500 levels on a tradable basis, the index can be expected to rally towards 10700 levels and then 10840 odd levels on the upside.

On the downside, immediate support is seen at 10320 levels, while major support for the market remains at 10,000 odd levels. INDIA VIX has seen cooling off in last week to 11.76 levels which have been supporting for the bulls.

Here is a list of top 5 stocks which can give up to 25% return:

Network18: BUY| CMP Rs60| Stop loss Rs55| Target Rs75| Return 25%

The stock has formed a bullish inverted head and shoulders pattern on the weekly chart. The pattern low has been made on a relatively low volume, while the rising leg of the pattern in the latter half has been on high volumes.

Thus, indicating accumulation in the stock from lower levels. Last week, the stock witnessed a breakout from this pattern on strong price momentum and volumes indicating a breakout is likely to be sustained.

The stock has also crossed a major falling resistance trend line originating from December 2014 high of Rs71 and broken the sequence of lower top formation.

The price has also seen a breakout from Bollinger band with the expansion of charts on weekly chart suggesting the start of a fresh uptrend. Thus, the stock is a buy at current levels and on dips to Rs58 with a stop loss of Rs55 for target Rs75 levels.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

CESC: BUY| CMP Rs1049| Stop loss Rs1000| Target Rs1200| Return 14%

The stock had seen a rally from 850 odd levels in July to high of 1080 in September. For the last three months, it has been in a sideways to negative corrective mode between 1080 to 972 levels. This price action has led to the formation of a descending triangle pattern on daily chart.

Last week, the stock witnessed a breakout from this pattern on strong momentum and high volumes indicating a breakout is likely to be sustained.

Price has also seen a breakout from Bollinger band with the expansion of charts on the daily chart suggesting a start of a fresh uptrend. The stock has seen a bounce from its 100-day moving average which has acted as support for the stock in the past.

MACD has given positive crossover on the daily chart. Thus, the stock is a buy at current levels and on dips to Rs1030 with a stop loss of Rs1005 for target Rs1200 levels.

Tata Chemical Ltd: BUY| CMP Rs735| Stop loss Rs700| Target Rs845| Return 15%

The stock had seen a strong rally from the low of Rs568 in September to a high of Rs766 in October on high volumes indicating buying participation.

Since then the price has been trading in a range for the last couple of months between Rs766 and Rs703 levels on low volumes indicating investors in the stock holding on to their longs even after the sharp run-up.

This correction has retraced less than 38.2% Fibonacci retracement of the upswing (568-766), indicating strength in the counter. This consolidation has now formed descending triangle pattern on the daily chart.

MACD has given positive crossover with its average on daily chart after turning up from the neutral level of zero suggesting price is likely to resume its uptrend.

Hence considering the price structure and volume action breakout can be expected to be on the upside. Thus, the stock is a buy at current levels and on dips to 720 with a stop loss of 700 for target 845 levels.

Dabur: BUY| CMP Rs353| Stop loss Rs335| Target Rs400| Return 17%

The stock had seen rounding bottom formation between 320 and 260 levels from September 2016 to October 2017. At the start of November, the stock gave a breakout from the pattern with a sharp spike to hit a high of 361 levels.

Since then the stock has been trading in a range of 352 and 330 levels above previous breakout level. The 20-day moving average has been acting as support for the stock and recent reversal has been from the average.

Now, the stock is showing signs of strength and likely to see the start of a fresh uptrend. Thus, the stock is a buy at current levels and on dips to 347 with a stop loss of 335 for target 400 levels.

Granules India Ltd: CMP Rs132| Stop loss Rs122| Target Rs165| Return 25%

The stock has seen major consolidation between 165 and 100 levels over last two years. Since August 2017, the price has been forming higher lows suggesting buying coming at higher levels. The recent decline in the stock from 140 to 120 levels has been on below-average volumes. While the bounce from 122 levels has been on high volumes suggesting accumulation at lower levels.

MACD has given positive crossover with its average on the daily chart and moved above neutral level of zero. Thus, the stock is a buy at current levels and on dips to 129 with a stop loss of 122 for target 165 levels.

MORE WILL UPDATE SOON!!

Technical View: Nifty forms a ‘Hanging Man’ like pattern; book partial profits

Investors who are long on Nifty can consider booking partial profits while for the rest of the position a strict stop loss below 10,426 could be placed, suggest experts.

   

The bulls remained in control of D-Street despite weak global cues to take the index to a fresh record high of 10,545.45 on Tuesday. The index formed a bullish candle for the second consecutive day in a row which closely resembles a ‘Hanging Man’ kind of pattern on daily charts.

The index continues to make high highs and higher lows which suggest that the bullish momentum remains intact, but considering the fact we are trading near record highs some consolidation cannot be ruled out.

Investors who are long on Nifty can consider booking partial profits while for the rest of the position a strict stop loss below 10,426 could be placed, suggest experts.

A Hanging Man is a bearish reversal candlestick pattern which is usually formed at the end of an uptrend or at the top. In a perfect 'Hanging Man' pattern either there will be a small upper shadow or no upper shadow at all, a small body and long lower shadow.

The market witnesses a significant selloff in the beginning just like we saw in Tuesday’s trading session but still manages to recoup some of the losses and closes near the opening level.

The Nifty50 which opened at 10,512.30 slipped to an intraday low of 10,477.95 which made a long lower shadow, but then bulls took control and pushed the index to a record high of 10,545.45 which made a small upper shadow.

“Albeit Nifty50 registered a new lifetime high it witnessed a ‘Hanging Man’ kind of formation after moving in a narrow range of around 60 points. However, as momentum is quite strong and favouring bulls it looks prudent to ride the rally with a stop below 10426 levels on closing basis,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.

“Traders are advised to take a cautious stance as we head towards critical resistance points of 10600 – 10,650 levels and they should consider part profit booking in next trading session as we head higher towards 10,600 levels and remain focused on extremely stock specific opportunities,” he said.

India VIX moved up by 3.99 percent at 12.05. Volatility moved higher after declining in the last six trading sessions. Overall lower volatility is supporting the Bullish bias of the market.

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. Significant Put writing was seen at 10500 strikes while fresh Call writing was seen at 10550 to 10700 strikes.

“Shift in Put writing, as well as Call writing to higher strike, suggests shifting of the support. Option band signifies a broader trading band between 10400 to 10600 levels for next coming sessions,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.

“Nifty formed a Bullish candle on the Daily chart and given the highest daily close with the intraday gains of around 40 points,” he said.

Taparia further added that Nifty has to continue to hold above 10500 zones to extend its move towards 10600-10650 while on the downside supports are seen at 10450 then 10400 levels.

MORE WILL UPDATE SOON!!

Market ends at record highs post last hour surge; RCom up 31% post debt rejig plan

The day was largely dominated by flat moves on both indices, as the Street could have taken a backseat due to the ongoing holiday season, but last hour surge pushed indices higher.

   

A huge surge in the final hour of trade pushed benchmark indices higher and closed at record high levels. The Sensex ended above 34,000-mark, while the Nifty ended above 10,500-mark.

The day was largely dominated by flat moves on both indices, as the Street could have taken a backseat due to the ongoing holiday season. Metals and pharma were the top gainers on indices. In the broader markets, midcaps continued to shine, as the Nifty Midcap index ended higher by 0.82 percent. The BSE Midcap and smallcap closed with healthy gains as well.

The Nifty Bank too turned positive in the final hour of trade, as the index erased all of its losses.

The Sensex was up 70.31 points or 0.21% at 34010.61, and the Nifty up 38.50 points or 0.37% at 10531.50. The market breadth was positive as 1,688 shares advanced, against a decline of 1,084 shares, while 178 shares are unchanged.

Among stocks, Kotak Mahindra Bank and Yes Bank provided support to Nifty Bank, while HDFC Bank was a laggard.

Stocks such as Jet Airways, SAIL, DLF, and JSPL hit intraday 52-week highs.

Shares of Anil Ambani-led Reliance firms rose 2-31 percent intraday on Tuesday on the back of announcements related to debt reduction issues.

Reliance Communications, Reliance Infrastructure, Reliance Capital and Reliance Power gained big on the back of this announcement.

In a press conference, Ambani announced that the firm will announce the strategic debt restructuring (SDR) and have achieved full resolution for the company. “There will be no equity conversion for lenders and zero write-off to lenders,” he told mediapersons in Mumbai.

Further, he said that the company will reduce Reliance Communications’ debt by Rs 25,000 crore and the transactions will be closed in a phased manner between January and March 2018.

Shares of Alembic Pharmaceuticals rose 1 percent in the early trade as its associate company Rhizen Pharmaceuticals received USFDA approval for cancer drug. The stock ended on a flat note.

Welspun Corp added 13.5 percent intraday as it bagged an order for supply of 124 K MTs pipes. The stock ended 4 percent higher.

Coromandel International touched 52-week high of Rs 558.60, gaining 3 percent as it announced acquisition of bio-pesticides business of EID Parry for Rs 338 crore.

Among commodities, gold rallied by Rs 100 to Rs 29,975 per ten gram at the bullion market on the back of positive global cues amid increased buying by local jewellers.

Silver followed suit and advanced by Rs 170 to Rs 38,870 per kg due to increased offtake by industrial units and coin makers.

Marketmen said a firm trend overseas where gold hit a more than three-week high in low-volume trade amid a weaker dollar, mainly kept the precious metals higher.

“The underlying sentiments continue to remain positive. However, with indices trading at record highs investors and traders should be cautious. With lack of any fresh positive triggers on the domestic bourses, we expect the market to consolidate in the near term. Investors can continue to accumulate fundamentally sound stocks on dips,” Jayant Manglik, President, Retail Distribution, Religare Securities said in a statement.

MORE WILL UPDATE SOON!!

Nifty Bank Outlook for the Week (Dec 26, 2017 – Dec 29, 2017)

Nifty Bank closed the week on positive note gaining around 0.80%.

As we have mentioned, last week that minor resistance for the index lies in the zone of 25400 to 25500. Resistance for the index lies in the zone of 25900 to 26000 where the index has formed a top in the month of November-2017. If the index manages to close above these levels then the index can move to the levels of 26300 to 26400. During the week the index manages to hit a high of 25780 and close the week around the levels of 25650.

Minor support for the index lies in the zone of 25400 to 25500. Support for the index lies in the zone of 25000 to 25100 from where the index broke out of triple top pattern. If the index manages to close below these levels then the index can drift to the levels of 24500 to 24600 where break out gap for the index is lying.

Resistance for the index lies in the zone of 25900 to 26000 where the index has formed a top in the month of November-2017. If the index manages to close above these levels then the index can move to the levels of 26300 to 26400.

Range for the week is seen from 25100 to 25200 on downside & 26000 to 26100 on upside.

 

MORE WILL UPDATE SOON!!

Nifty Outlook for the Week (Dec 26, 2017 – Dec 29, 2017)

Nifty closed the week on positive note gaining around 1.50%.

As we have mentioned last week, that 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. During the week the index manages to hit a low of 10075 and close the week around the levels of 10493.

Minor support for the index lies in the zone of 10300 to 10400. 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 10600 to 10700 where trend-line joining highs formed in the month of September-2016 and August-2017 is lying. If the index manages to close above these levels then the index can move to the levels of 10900 to 11000.

Broad range for the week is seen from 10200 on downside & 10800 on upside

MORE WILL UPDATE SOON!!

Market Week Ahead: F&O expiry, FIIs in vacation mode among 10 things to track

After big gains, the rally might continue in the coming truncated week but largely there could be volatility and range bound trade, experts suggest.

   

The week gone by was great for the market as not only equity benchmarks, but also broader markets ended at fresh record closing highs, driven by technology, metals, auto, FMCG and PSU banks stocks. The BJP's victories in the Gujarat and Himachal Pradesh Assembly elections lifted sentiment. Global cues also lent support after the US passed a bill that slashes the corporate tax rate in the country to 21 percent from 35 percent.

Benchmark indices added more than 3 percent gains in three consecutive weeks while for the passing week, the 30-share BSE Sensex gained 1.4 percent; and the 50-share NSE Nifty rallied 1.55 percent to close a tad below the psychological 10,500-mark ahead of expiry of December futures & options contracts next week. The index hit an intraday record high of 10,501.10 on Friday.

Short covering could be one reason for rally as the rupee has been rangebound around 64-64.50 against the US dollar during the month despite FII selling, and rising bond yields and crude oil prices.

The broader markets outperformed frontline indices, with the Nifty Midcap index surged 4.4 percent and BSE Smallcap gained 4.5 percent. On the other side, the volatility has also gradually been reduced especially after the Gujarat elections, with India VIX falling to 11.5875 from 16.4075 in previous week.

After big gains, the rally might continue in the coming truncated week but largely there could be volatility and rangebound trade, experts suggest.

One reason for consolidation would be the December F&O expiry on Thursday and second would be the low volumes expected at FIIs desk and lack of cues due to Christmas holidays.

Experts expect stock-specific action to continue.

Overall, 2017 is expected to end with around 28 percent gains on the Nifty, though there could be consolidation in the last week of the year.

Amar Ambani of IIFL Private Wealth feels with FIIs now in vacation mode, subdued index action is likely and the focus on broader markets is expected to stay.

The momentum that has been built up following Gujarat Elections has been complemented by global factors as well. So, the momentum is expected to continue. However, for the Nifty to move above 10,700 and 10,800, it will need support of strong earnings growth as well as GDP growth.

Indian and global markets will remain shut on Monday for Christmas.

Here are 10 things to watch out for in the coming truncated week:-

F&O Expiry

The Nifty futures and options contracts will expire on Thursday and trading positions will be rolled over to January the series.

On Friday, Maximum Put open interest was seen at 10,000 strike followed by 10,400 while maximum Call OI was at 10,500 strike followed by 10,600 strike.

Fresh Put writing was seen at 10,400, 10,450 and 10,500 strikes while fresh Call writing was seen at 10,550 and 10,650 strikes.

As volatility is largely expected in the coming week, the 10,400 levels on the Nifty could be key to watch out for and the expiry is likely around 10,400-10,500 levels.

The Nifty 50 is expected to consolidate above 10,400 in the coming week. Eventually, it should be able to move towards 10,600.

“Shift in Put writing, as well as Call writing to a higher strike, suggests shifting of the support. Option band signifies a broader trading band between the range of 10,400 to 10,600 for next coming session.

Winter Session of Parliament

The ongoing winter session of Parliament will be important to watch out for. The Rajya Sabha has been in a deadlock since the beginning of session as the Congress is demanding that Narendra Modi apologise for allegedly insulting his predecessor Manmohan Singh during the Gujarat election campaign. So all eyes will be on how the government is able to pass the important Bills listed on its agenda.

The Goods & Services Tax (Compensation to States) Ordinance, 2017, Insolvency & Bankruptcy Code (Amendment) Ordinance, 2017, Indian Forest (Amendment) Ordinance, 2017, Motor Vehicles (Amendment) Bill, 2016, and Muslim Women (Protection of Rights on Marriage) Bill, and Prevention of Corruption (Amendment) Bill, 2013 are some of the important bills expected to be taken up.

Auto Sector

Auto stocks will remain in focus in the coming week, especially on Friday ahead of December sales data due on January 1.

Sales data have been good so far and there was no disruption due to GST rollout.

The Nifty Auto index rallied more than 30 percent in 2017 and gained over 4 percent in the passing week.

Oil Sector

Oil stocks will be in focus on Tuesday as crude oil prices are near their highest levels since 2015 after comments from Saudi Arabia and Russia stating that any exit from crude output cuts would be gradual.

Oil marketing companies (HPCL, BPCL and IOC) might be under selling pressure but oil exploration firms (ONGC and Oil India) may strengthen further.

ONGC rallied 3 percent on Friday following an increase in crude oil prices. Brent crude oil futures ended above USD 65 a barrel last week.

If crude oil rises further from here on then that will have major impact on fiscal deficit and economic growth as India imports around 80 percent of oil requirement.

Macro Data

On Friday, infrastructure output data for November (which was at 4.7 percent in October) and foreign debt for Q3 (USD 485.8 billion in previous quarter) will be released.

Foreign Exchange Reserves for the week ended December 22 (which was at USD 401.39 billion in the previous week) will also be announced on Friday.

Technical Outlook

The Nifty50 formed a robust bull candle after two bearish candles which is a bullish sign, experts said. Investors should remain long with a stop loss below 10,426 levels, they advised.

"The near term trend of Nifty is positive as per smaller and larger timeframe (like daily and weekly) and more upside could be expected in the next couple of weeks. However, due to year end, there is possibility of gradual up move amidst range bound action for next week," Nagaraj Shetti, Technical Research Analyst of HDFC Securities said.

Mitessh Thakkar of mitesshthakkar.com said the hope is that on Tuesday the market is expected to open with a gap-up and continue with the momentum. If that happens, then 10,700-10,750 should be immediate targets.

"However, if there is a gap-down then we will back to the range of 10,400-10,500, which might last for 1-2 sessions," he added.

FIIs and DIIs Flow

The money flow from foreign institutional investors could be slowed down in the coming week as FIIs generally go on leave during the last week of the year because of the Christmas holidays. However, domestic inflow is expected to continue.

"The market optimism is expected to continue due to expectation of NAV-based buying till December end," said Anita Gandhi, Whole Time Director at Arihant Capital Markets.

Domestic institutional investors were net buyers to the tune of around Rs 3,500 crore in the passing week while FIIs have net sold nearly Rs 3,000 crore worth of shares.

Corporate Action

Stocks in Focus

Prakash Industries may react to the news that SEBI has revoked its order regarding suspected shell companies.

Corporation Bank will also be in focus as its board of directors has approved additional fund raising of Rs 300 crore in one or more tranches with greenshoe option.

EID Parry may react positively as the board has approved sale of its bio pesticides business as a going concern by the way of slump sale to Coromandel International for Rs 303 crore. It also approved sale of entire stake in Parry America Inc for Rs 35.4 crore.

Reliance Communications will be in focus as a media report indicated that Reliance Jio emerged as highest bidder for the company's assets.

Global Cues

The minutes of the Bank of Japan monetary policy meeting will be released on Tuesday. On Thursday, Japan's industrial production data for November and US initial jobless claims for the week ended December 22 will be announced.

MORE WILL UPDATE SOON!!

As domestic liquidity is expected to stay buoyant, keep these five stocks on the radar this Christmas for 2018

For a continued uptrend positive follow through on the above mentioned factors is of utmost importance. Globally too, favorable markets will contribute to the bullish sentiment.

  

Top 5 sectors should be- Commodities, Consumer staples, Infrastructure, Housing and building products along with housing finance companies and Automobiles.

As we move to 2018, what are your 5 best picks for 2018?

Talwalkars

It is a unique play to participate in India’s fitness industry as the company is the market leader with a network of 211 fitness centres.

Demerger of its two business – the gym business and lifestyle business will bring to fore the superior shareholder returns of the gym company, leading to a sharp re-rating and value unlocking.

Jindal Steel and Power

Capex at Angul plant to increase capacity, continuous debt repayment, heavy order book and visibility of earnings in power business are factors to look out for in JSPL.

Time Technoplast

We recommend Time Technoplast on the back of unique blastproof cylinders with order book 2.8X the capacity, newly entered MOX films and improved results every quarter.

Arvind

A big beneficiary of GST, foray into the garments business in Ethiopia, high growth of brand portfolio and expanding retail footprint are expected to propel growth and profitability.

Significant manufacturing incentives and duty-free access to international customers in Europe and USA will boost the garments business. Increase in fabric conversion will enable the company to improve its overall textile margins. Demerger to unlock value will lead to renewed focus on core business.

Uflex

Foray into high growth Aseptic packaging segment, stable margins and flexible packaging business and cheap valuations as compared to peers should make the stock rally upwards.

MORE WILL UPDATE SOON!!