FPI inflows on course for a record, may jump 5-fold in FY18

Foreign Portfolio Investors (FPIs) had pumped in Rs 48,400 crore or USD 7 billion into the domestic equities in FY17 and this is set to witness a four-five-fold increase in the year to March at USD 28-35 billion.

 

On a day when the key indices scaled new life-time highs on strong inflows, a research report has said foreign portfolio investors are on course to pump in a record USD 28-35 billion by March — which is a four- five-fold spike over FY17.

The benchmark indices-Sensex and the Nifty-has scaled 28 per cent in the calendar year 2017 over 2016 and since then the markets scaled new peaks in the first week of the new year with both the indices closing at new lifetime peaks with today being another record close.

Foreign Portfolio Investors (FPIs) had pumped in Rs 48,400 crore or USD 7 billion into the domestic equities in FY17 and this is set to witness a four-five-fold increase in the year to March at USD 28-35 billion.

We expect net inflows to be Rs 1.8-2.2 trillion (USD 28-35 billion) for FY18. Already they have pumped in Rs 95,600 crore (USD 15 billion) in the first half of this fiscal, against Rs 48,400 crore (USD 7 billion) for the entire FY17," domestic rating agency Icra said in a report today.

According to Icra senior vice president Karthik Srinivasan, FPI investments in the current fiscal are driven by the debt segment which received a net inflow of Rs 1.17 trillion in the April-November period with positive net inflows across all months.

Supported by healthy inflows, the utilisation of the FPI investment limit in G-secs and corporate debt increased in the current fiscal year despite an enhancement in the permissible investment limits," Srinivasan said.

The equity segment, however, witnessed a net outflow of FPI investments in the August-September period amidst concerns on earnings growth, rising valuations and slowing growth," he added.

The report noted that while the enhancement in FPI limits has reinvigorated the pace of inflows into the debt market, the trend is expected to moderate in the coming months, given the high utilisation levels for G-secs and corporate bonds.

However, it observed that the recent rate hike by the US Fed in December 2017, the ongoing balance-sheet trimming by the US government and the passage of the Tax Cuts & Jobs Act of 2017 have pushed up US treasury yields.

This has in turn contributed to a spike in yields for domestic debt securities, which would help to maintain their relative attractiveness for international investors. Icra expects the debt segment to register net FPI inflows of Rs 1.5-1.6 trillion (USD 24-26 billion) in 2017-18.

The agency expects Rs 27,000-59,000 crore (USD 4-9 billion) of FPI flows into equity in 2017-18, noting that such inflows would remain dependent on the pace of economic growth and the strength of the recovery in corporate earnings.

Meanwhile, the report said the number of FPI registrations with the Securities and Exchange Board has surged in the past couple of years, with over 4,500 FPIs registered between April 2016 and October 2017 including 1,064 in the current fiscal.

This increase in FPI registration largely stems from the regulatory compliance requirements following the introduction of the new FPI regulations in FY 2015," the report said.

Migration of FPIs from 'deemed FPIs' to 'registered FPIs' status, and healthy investment inflows this year augers well and reflects international investors sustained interest in the domestic markets.

MORE WILL UPDATE SOON!!

Sit tight as we are in a bull market; Sensex could deliver up to 20% return in 2018

You may attribute some returns to mega announcements made in the recent past, including the bank recapitalization and the Bharat Mala Project, both of which have brought life back to ailing PSU banks and Infrastructure companies.

  

The most developed countries, including the US, Japan and Germany are witnessing a surge in equities led by the earnings growth of 10-15 percent for the first time since 2010.

India, meanwhile, has seen declining earnings growth on account of economic disruptions including demonetisation, RERA, GST, Benami Property Act etc.

Despite the confusion and disturbance caused by the government interventions to structurally reform the country, the capital markets are surging. The Nifty and Sensex have scaled new heights. But the important questions one needs to ask is:

Should one be worried about entering at current levels?

Is the market too expensive to deliver returns within a one-year time frame?

Will FIIs enter the markets next year?

The S&P BSE Sensex and Nifty gave returns of 29 percent in the year 2017. Will they replicate the performance in 2018? You may attribute some returns to mega announcements made in the recent past, including the bank recapitalisation and the Bharat Mala Project, both of which have brought life back to ailing PSU banks and Infrastructure companies.

But, a large part of returns this year has come from liquidity.

Before we proceed further, let’s first understand what drives returns? There are only 3 factors, let’s take each one of them in detail:

1. Valuations

2. Earnings

3. Liquidity

Valuations:

Valuations of the indices are nowhere close to the undervalued zone. Last year-end, we saw Sensex price to earnings multiples at 19 times trailing and should end at around 24 times in Dec 2017.

Price to book, another measure of valuation, stood at 2.6 times and should cross 3 times in the current calendar. These are historical methodologies devised by Western economists and may not be relevant from an Indian perspective. Let me explain this.

Most earnings multiples take into account discounted cash flows from future. They discount the cash flows at the weighted average cost of capital. Also, DCF is generally taken for 8 -10 years as most valuation experts believe they can’t see the future beyond 10 years.

The beauty of the Indian markets is that there are some companies which grow 2X to 2.5X as compared to the weighted average cost of capital on a long-term basis.

This can deliver sustained EPS growth over longer periods of time, beyond 20 – 25 years in many cases. The beauty of the Sensex lies in the fact that as companies stop growing or generating significant earnings, they have constantly been thrown out of the indices, making the system more efficient.

Also, if the price to earnings multiple remains constant for longer periods of time, only EPS will drive returns.

Now the question one should be asking is whether a PE expansion is expected in the next 1 year? The answer to that is - a marginal jump, and hence PE expansion will not drive returns to a great extent.

Earnings:

Between last calendar and this calendar Sensex or Nifty earnings are expected to grow merely by 600 to 700 basis points; the Sensex has already delivered 29 percent returns in CY17. One may argue that this year may be flat.

I generally don’t disagree with that, but the Indian economy is projected to grow nominally, at 11 percent, and if Sensex or Nifty remains flat, there will be companies giving robust earnings beyond the ones which are part of the indices.

Again, the argument could be that unlisted companies may grow faster than listed entities. Generally, listed entities have better corporate governance due to higher disclosure norms, independent board of directors and cheaper cost of capital and hence listed should do better.

Reforms implemented last year and this calendar will benefit a large number of compliant companies which will see a drop in the cost of capital, consolidation of demand in their favour with unorganized players leaving the scene, higher efficiency in the working capital cycle.

In essence, many companies will deliver earnings and in turn price returns in excess of 20%. The question remains - can you find them?

Liquidity:

We have constantly seen that any large move from the government in terms of reforms is accompanied by bouts of FII selling. In Dec 2016, the month of the demonetization, FIIs sold 1.3billion USD in equities.

Immediately after GST implementation, when the Indian business community was struggling with GST implementation, FIIs again sold almost 2billion USD in August 2017 and 1.65billion USD in Sept 2017.

For calendar 2017, FIIs bought 8billion USD in equities whilst DIIs bought 18.50billion USD in equities. This may just the beginning of savings moving into financial assets, mainly into equities from fixed deposits.

Only 13 percent of total savings in India are in financial assets and only 6-7 percent of such savings have gone into equities. Investment avenues, barring equities, generating potentially north of 10 percent returns have dried up and hence if anyone needs to beat CPI + wage inflation, one is left with little or no option for growing the savings beyond quality equities.

Also, 4 NDA ruled states and a large southern state is staring at elections in 2018. Together with this, marginal victory in Gujarat may force NDA to be populist than reformist for next one and a half years. Thus not major disarrangement is expected for NDA's residual tenure.

Broadly, all the factors mentioned above are related; but for now, liquidity will continue to drive the momentum followed by sustained earnings multiple and growth in earnings.

Thus, I can’t assure you that Sensex of Nifty will deliver returns north of 20 percent but surely clean and well-governed companies which have managed to maintain their moats will give a repeat performance.

MORE WILL UPDATE SOON!!

Use rallies to go short on Nifty; 5 stocks which can give up to 15% return

We expect the market to trade in a consolidation phase for coming sessions and the range would be 10,400-10,550.

The Nifty index closed the day on a flat note on Wednesday after a volatile session. Consecutively, the index showed a volatile session for the third day in a row and closed at 10,443.20.

Technically, the index has formed strong resistance near 10,550 zone and we have seen a strong profit booking from the said levels. On the downside, 10400 has become a strong support as we witnessed Nifty bouncing back from those levels recently.

For now, we can expect the market to consolidate in the range 10,400-10,550 for the coming session and any breakout on either side which will decide the final direction for the markets.

On the options front, highest open interest (OI) shifted to 10300 PE which was previously at 10,000. Hence, 10300 would be the first strong support for January month and on the higher side, 11000 CE has the highest open interest followed by 10600 CE which will act as a strong immediate hurdle in January month.

Overall, it is a buy on the dip and a sell on rise market. Traders can use any dips to buy into quality stocks and every rise to initiate fresh selling position with keeping a stop loss above 10,600 levels.

We expect the market to trade in a consolidation phase for coming sessions and the range would be 10,400-10,550.

Here is a list of five stocks which can give up to 15% return in short term:

SHK: BUY | Target Rs 330 | Stop Loss Rs 270| Upside 12%

The stock was in a consolidation phase since last six months and formed a double bottom kind of pattern on the weekly charts which saw a breakout last week with strong volume hinting that the bottom is formed and the stock is to rally further.

The stock managed to cross above all the strong DMA’s like 200-100-50 on the daily chart and also momentum indicator RSI also entered in bullish territory.

The momentum traders can take the position in the counter at current levels to any dip near Rs280 for the targets of Rs330. A stop loss can be kept below Rs270 on a closing basis.

BF Utilities: BUY | Target Rs 540-580 | Stop Loss Rs 460| Upside 14%

The stock is trading in a short-term uptrend and if we look at the current chart structure, the stock rose after taking support from its 50-EMA with good volumes.

In the Wednesday’s session, the stock has given a bullish flag breakout with decent volumes which suggests a short-term uptrend can extend further.

On the weekly charts, the stock has taken a support at its 100-DMA and the rallied but the immediate hurdle of 200-DMA is placed at 540 levels which will cap any further upside in the counter.

Traders can initiate a long call on stock at current levels to any dip near 490 for the targets of 540-580 with keeping a stop loss below 460 on a closing basis.

Cummins India Ltd: BUY | Target Rs 955-980| Stop Loss Rs 890| Upside 5%

The stock has formed a bottom around Rs840 zone and started moving northwards. Recently, the stock was able to break above all strong DMA’s. In Wednesday’s session, the stock has broken from its bullish flag pattern which is a continuation pattern by nature.

On the weekly chart, the stock has taken support at its 200-DMA and managed to break above 100-DMA suggesting strength. Volume activities also increased at the time of taking support which is again a positive sign.

Considering technical setup, one can initiate a buy call on the stock at current levels to any dip near 910 for the target of Rs 955 & 980. A stop loss can be placed below Rs 890 on a closing basis.

GE Power: BUY | Target Rs 830 | Stop Loss Rs 650| Upside 13%

The stock was consolidating in a narrow range for nearly four months but it broke the consolidation range recently on the upside which is a bullish sign.

On the weekly charts, the stock has recently broken from its Cup and Handle pattern which is again a bullish confirmation. The stock is trading above all strong DMA’s like 200-100-50 etc, and the momentum indicator such as RSI is currently reading at 62 suggesting strength.

Traders can initiate a long call on stock at current levels to any dip near 715 for the targets of 770 & 830. A stop loss can be kept below 650 on a closing basis.

Hindustan Copper: BUY | Target Rs 115 | Stop Loss Rs 89| Upside 15%

The stock has given a tremendous return in the month of November as the stock rallied from Rs70 to Rs110. But, then it showed a healthy correction and formed base near Rs 88.

If we look at current chart structure, the stock has taken two-time support near 88 zones and bounce sharply. The current chart suggests the stock is forming Cup and handle pattern which will get active above 105 levels.

The recent rise in strong volume hinting stock can move towards 105 levels in a quick run and if manage to hold above 105 then we may see quick up move up to 110 in near term.

Momentum traders can initiate a long call on stock at current levels to any dip near 95 for the targets of 105 & 115. A stop loss can be placed below 89 on a closing basis.

MORE WILL UPDATE SOON!!

Nifty may end 2018 at 11,500; 5 multibagger picks that can double money in 2-3 years

2017 has truly been a good year for equity markets in India although globally other markets have fared even better, but for CY 2018 investors need to tone down their expectations. Top five stocks which you think could give multibagger return in the next 2-3 years?

   

In our view CY 2018 could be the year of stock specific stocks and we believe that investors with more than two-year time horizon could end up doubling their money in the following five stocks.

Action Construction Equipment

Action Construction has a virtual duopoly in mobile cranes with significant market share. It is a perfect proxy to play the capex recovery theme in India both with respect to road construction as well as farm equipment.

CDSL

It is a classic duopoly with a unique business model having a predictable double digit revenue growth as well as predictability in compounding earnings at a CAGR of 20 percent.

Superior gross margins of 55 percent coupled with multiple upside triggers makes the depository a unique choice in the fast growing financial services space.

Exide Industries

Exide has a duopoly in batteries segment. An underperformer within the sector is at the cusp of an inflexion point as the GST regime coupled with various initiatives to wrest market share from peers begin to propel this debt free entity with a strong brand pull to higher levels.

Raymond

The Rs 6,000-crore entity is making rapid strides in its branded apparel segment given its power brands as the disruptions on account of GST is now behind.

And value unlocking from its surplus land in Thane coupled with planned initiatives on non-core business as well as other new age business could in our view propel the company towards the next leg of growth.

UPL

Large diversified fully integrated agrochemical player with global footprints backed by huge distribution network is in our view perfectly positioned to leverage on its pool of product exclusivity and product registrations.

Gross margins of more than 50 percent with healthy return on equity of 23 percent makes UPL our pick to play the global agro chemical theme.

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: 2 stocks and 4 sectors on analysts radar on January 4

Credit Suisse has an Outperform rating for Tata Steel with target price at Rs 830 per share and JSW Steel with target at Rs 300, but has a neutral rating for Jindal Steel & Power with target price at Rs 150.

   

Steel Sector

Credit Suisse said the recent shutdown in Odisha state has taken out 10 percent of India's Output.

India may turn into a net importer of again as steel production continues to rise and domestic iron ore prices may rise if India turns net importer of ore, it feels.

With domestic steel output is still growing, net exports of ore have fallen to near zero, the research house said.

Credit Suisse further said rise in domestic steel prices benefits vertically-integrated players like Tata Steel.

The research house has an Outperform rating for Tata Steel with target price at Rs 830 per share and JSW Steel with target at Rs 300, but has a neutral rating for Jindal Steel & Power with target price at Rs 150.

Information Technology Sector

CLSA said CY17 saw a better-than-feared year for IT sector even as growth & earnings disappointed.

"We don’t see strong bottom-up signs of growth recovery. Companies will have to negotiate challenges from immigration & tax change distractions," it added.

The research house expects demand to continue to remain soft in Q3 results for IT companies. December 2017 will be a seasonally weak quarter with constant currency QoQ growth of 1-2.6 percent, it said.

CLSA has reduced its growth expectations for Wipro, TCS & HCL Technologies, and lifted expectations for Infosys.

Infosys, HCL Technologies and TCS are its key buy ideas.

The research house has downgraded Wipro to Sell from Outperform and maintained Sell on Tech Mahindra.

It has lowered revenue & EPS by 1-2 percent for Wipro, TCS & HCL Technologies while it increased Infosys target by 8 percent but lowered Wipro target by 9 percent.

Consumer Sector

CLSA said after a challenging last year, it expects 2018 to witness a pick-up in demand for consumer sector.

Rise in oil prices and related derivatives are concerns but it forecasts margin to sustain.

The research house is optimistic on rural India given rising government spending & general election in 2019.

It has retained its Buy call on ITC, Emami, GSK Consumer, Varun Beverages & Jubilant Foodworks.

The research house has upgraded Asian Paints to Buy from Underperform, Titan to Outperform from Buy, Godrej Consumer to Outperform from Underperform; and Kansai Nerolac to Outperform from Buy.

Automotive

CLSA prefers M&M followed by Maruti Suzuki/Eicher Motors in original equipment manufacturer, and Bharat Forge in auto components segment.

Industry seeing decent demand trends in most segments should sustain in FY19, it believes.

The research house said fading low base will impact YoY growth rates in the year.

It expects passenger vehicle and medium & heavy commercial vehicle segments to post a healthy 10 percent volume CAGR in FY19-20. It also expects 2-wheelers to post moderate to 7 percent CAGR in FY19-20.

CLSA believes the competition should remain high in 2-wheelers & trucks but it is easing in passenger vehicles.

Higher input prices & regulatory changes will pose margin headwinds, it feels. It prefers stocks benefitting from cyclical recovery or having solid franchise.

ICICI Bank

Brokerage - Motilal Oswal | Rating - Buy | Target - Rs 370

Motilal Oswal has reiterated its Buy call on ICICI Bank with a target price of Rs 370 per share as it has maintained 18-20 percent growth guidance for retail segment, though margin is likely to moderate in second half of FY18.

Subsidiaries & associates account for over 30 percent of target valuation, it said.

It further said bank's monetisation of arms is on track and the pace of decline in overseas loans is expected to moderate.

It expects credit cost to moderate from FY19.

Progress on asset resolution via National Company Law Tribunal remains a key trigger for the stock, it feels.

Dr Reddy's Laboratories

Brokerage - Nomura | Rating - Buy | Target - Rs 3,281

Nomura has a Buy call on Dr Reddy's Laboratories, with a target price at Rs 3,281 per share.

After reviewed established inspection report from USFDA for company's Duvvada plant, the regulatory risk at the unit is high, it said.

The research house doesn't expect escalation in the near term given passage of time.

Re-inspection outcome of Duvvada plant will be key for the stock, it feels.

MORE WILL UPDATE SOON!!

Wall Street starts year on strong note; Nasdaq ends above 7,000

The Dow Jones Industrial Average rose 104.79 points, or 0.42 percent, to 24,824.01, the S&P 500 gained 22.18 points, or 0.83 percent, to 2,695.79 and the Nasdaq Composite added 103.51 points, or 1.5 percent, to 7,006.90.

   

US stocks rose in the first session of the new year and the Nasdaq closed above 7,000 for the first time on Tuesday as investors were optimistic that 2018 will bring more gains for the market.

The Nasdaq, driven by gains in Apple , Facebook , Amazon and Alphabet , breached 6,000 in April of last year and closed above 5,000 in 2015 for the first time in 15 years. The technology index added 1.4 percent on Tuesday, following a 37-percent surge in 2017 that made it the best-performing S&P 500 sector.

The S&P 500 also hit a record high close. Besides technology, S&P consumer discretionary, healthcare, energy and materials indexes all were up more than 1 percent on the day.

Major stock indexes closed out 2017 with their best performances since 2013. Many investors say the rally could continue this year with help from the recently approved US tax overhaul that is anticipated to boost profits as well as the economy.

We're off to the races once again," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

"I don't expect the kind of moves we saw last year. But as long as monetary policy stays the way it is ... my view is stocks are going to have a decent year. And fiscal policy has become stimulative, as well, given the tax bill."

The Dow Jones Industrial Average rose 104.79 points, or 0.42 percent, to 24,824.01, the S&P 500 gained 22.18 points, or 0.83 percent, to 2,695.79 and the Nasdaq Composite added 103.51 points, or 1.5 percent, to 7,006.90.

"Our best guess is the first quarter or half of the year can be OK as a continuation of last year," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

But, he said, "valuations are still stretched, interest rates are still rising, and those will provide headwinds to the market at some point."

The S&P consumer discretionary index was up 1.5 percent, helped by a gain in Amazon of 1.7 percent.

J.C. Penney , Nordstrom and Kohl's climbed after a bullish Citigroup note on the retail sector detailed benefits from the corporate tax cuts.

Energy shares were up even though oil prices dipped. Oil hovered near mid-2015 highs amid large anti-government rallies in major exporter Iran and ongoing supply cuts led by OPEC and Russia. The S&P energy index rose 1.8 percent.

Shares of casino operators Wynn Resorts and Melco Resorts & Entertainment were down after a report showed a lower-than-expected rise in Macau gambling revenue in December.

Abbott Labs jumped 3 percent and hit an intraday record of USD 59.20 after two brokerages upgraded the company's stock to "overweight."

Shares of insurer Allstate were down 2.7 percent following a brokerage downgrade.

Advancing issues outnumbered declining ones on the NYSE by a 1.64-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.

About 6.7 billion shares changed hands on US exchanges. That compares with the 6.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

MORE WILL UPDATE SOON!!

Asia shares eye all-time top on global growth cheer

Investors also piled into emerging market trades. MSCI's index of Asia-Pacific shares outside Japan edged up another 0.1 percent, having jumped 1.4 percent on Tuesday in its best performance since last March.

  

Asian stocks struck a fresh decade high on Wednesday as risk appetites were whetted by a bevy of upbeat manufacturing surveys that confirmed a synchronised upturn in world growth was well under way.

Activity was especially strong in Europe, lifting bond yields there and driving the euro to within a whisker of its highest in three years against a beleaguered US dollar.

Investors also piled into emerging market trades. MSCI's index of Asia-Pacific shares outside Japan edged up another 0.1 percent, having jumped 1.4 percent on Tuesday in its best performance since last March.

The index is creeping ever closer to the all-time peak of 591.50 reached in late 2007. South Korean stocks were up for the fourth session running, while Japan's Nikkei remained closed for holidays.

Wall Street started the new year as it ended the old, scoring another set of record closing peaks. The Dow rose 0.42 percent, while the S&P 500 gained 0.83 percent and the Nasdaq 1.5 percent.

Apple , Facebook , Alphabet and Microsoft pulled the technology index up 1.4 percent, following a 37-percent surge in 2017 that made it the best-performing S&P sector.

The gains in riskier assets came as industry surveys from India to Germany to Canada showed quickening activity.

"The breadth of the recovery is extraordinary," said Deutsche Bank macro strategist Alan Ruskin, noting that of 31 countries covered, only three failed to show growth while all the largest manufacturing sectors improved.

"The global economy and risky assets are now solidly into a virtuous cycle, whereby growth is propelling risky assets like equities higher, that are then supporting growth," he added.

"This is not a global economy in need of the extraordinary emergency style policies pursued by the likes of the ECB and Band of Japan."

EURO ZONE OUTPERFORMS

Indeed, with euro zone factories expanding at their fastest pace in more than two decades, speculation is rampant that the European Central Bank will start to wind down its asset buying programme later this year.

As a result, yields on 10-year German paper climbed 4 basis points to a two-month top at 0.467 percent, which in turn pushed up rates across the European periphery.

Spanish yields, for instance, have risen 16 basis points in just three sessions to reach 1.616 percent.

The prospect that other major central banks could play catch up with the Federal Reserve on tightening undermined the dollar, which sank to three-month trough against its peers .

The euro stretched to a four-month top of USD 1.2082, adding to its 2017 gains of 14 percent. It was last at USD 1.2061 and bulls were eyeing its September peak of USD 1.2092, a break of which would return to ground last trod in early 2015.

The single currency has already reached a two-year high on the yen at 135.40, while the dollar was lagging far behind at 112.26 yen.

The weakness of the dollar was a positive for commodities priced in the currency.

Spot gold added 0.2 percent to USD 1,320.74 per ounce, having reached its highest since mid-September.

Oil prices hit their highest since mid-2015, only to stall when major pipelines in Libya and the UK restarted and US production soared to the strongest in more than four decades.

Brent crude futures were yet to trade at USD 66.57 a barrel, while US crude futures nudged up 5 cents to USD 60.42 a barrel.

MORE WILL UPDATE SOON!!

Nifty to face resistance around 10550; 4 stocks which can give up to 14% return

For the last couple of weeks, the index had been trading in a narrow range but closer to its all-time high levels and on Tuesday, Nifty formed a bearish candlestick covering this range.

It was a volatile start to the New Year 2018, with the sudden sell-off in the last hour of the trade, after bulls had been in control for most of the trading session on Tuesday.

Still, market breadth was positive with an advance-decline ratio of 5:4 and broader indices closed flat-to-positive outperforming benchmarks.

After a strong 2017, Nifty has got off on a negative note with the index losing 0.9 percent to close at 10436 levels on an opening day.

For the last couple of weeks, the index had been trading in a narrow range but closer to its all-time high levels and on Tuesday, Nifty formed a bearish candlestick covering this range.

Now, it needs to be seen if there is any follow-through action on the downside that could lead to short-term pressure in the market.

Hence, breaking below 10400 levels, the index may decline initially towards 10320 and then 10230 levels. Also, INDIA VIX moved up by 5.39 to 13.35 and has been inching up in last one week from low of 11.6 level.

Further, the rise in volatility could be the cause of concern for bulls. On the upside, Nifty has overhead resistance at 10550 levels. It needs to cross above 10550 levels for it to rally towards 10700 and then 10840 odd levels on the upside.

Here is a list of top four stocks which can give up to 14% return in the short term:

Petronet LNG: BUY| CMP Rs256| Stop Loss Rs244| Target Rs290| Return 13%

The stock touched a high of Rs276 in the month of November 2017 and since then the price has corrected down to Rs239 levels. It has now retraced 50% of the swing from last August low 198 to high of 276 which comes around 237 levels.

The stock has been consolidating between 260 and 239 levels to form descending triangle pattern on daily chart. Price has given positive crossover with a 50-day moving average which has been acting as support and resistance for the stock.

MACD has moved above the neutral level of zero on daily chart suggesting the correction is over in the stock. Thus, the stock is bought at current levels and on dips to Rs252 with a stop loss below Rs244 for a target of Rs290 levels.

BHEL: BUY| CMP Rs95| Stop Loss Rs91| Target Rs106| Return 11%

The stock has been trading in a sideways range of Rs95 to Rs86 levels for the last seven weeks. In the last trading session, the stock witnessed a breakout with strong price momentum and good volumes indicating buying participation in the stock.

The stock has also seen a Bollinger band breakout with the expansion of bands after a consolidation suggesting the start of a fresh uptrend. On the weekly chart, the stock seems to be forming bullish inverted head and shoulders pattern with the right shoulder in the process of formation, suggesting the stock is in broad bottoming out formation process.

Traders can buy the stock at current levels and on dips to 94 with a stop loss below 91 for target 106 levels.

Kajaria Ceramic: BUY| CMP Rs725| Stop loss Rs695| Target Rs810| 11%

The stock has been in a sideways consolidation for the last three months, largely between Rs750 and Rs660 levels. But, looking at the broader structure of the stock on the weekly chart, it has formed descending triangle pattern over last six months period.

It has been forming higher lows and volumes over last one year have been above average indicating buying coming at higher levels in the stock.

The lows have seen a bounce back from long-term 200-day moving average. The stock is now trading at breakout levels and is likely to move higher from current levels. The stock is bought at current levels and on dips to Rs710 with a stop loss of Rs695 for a target of Rs810 levels.

Crompton Greaves Consumer: BUY| CMP Rs270| Stop loss Rs254| Target Rs310| Return 14%

The stock formed a strong base between Rs245 and Rs200 levels over the period of last six months. In November, it witnessed a breakout and hit a lifetime high of Rs292 on high volumes indicating a good buying participation in the stock.

Since then, the stock has been trading sideways between Rs280-250 odd levels consolidating its gains above its breakout level. In this period volumes have been below average and seen steady decline suggesting investors holding on too long positions in the stock.

MACD has given positive crossover on the daily chart. Thus, the stock is bought at current levels and on dips to 265 with a stop loss below 254 for target 310 levels.

MORE WILL UPDATE SOON!!

Nifty likely to head towards 10650-10700; 5 stocks which can give up to 19% return

On the technical grounds as far we are maintaining above 10200 spot levels current trend is likely to continue towards 10650-10700 moving forward.

Overall derivative data indicates long rollover to January series. Derivative data indicates bullish scenario to continue with Nifty having multiple strong supports at 10,400 and 10,300 spot levels.

We might witness short covering on every dip. In the January option contracts, we are seeing options open interest (OI) building up in 10300 and 10400 puts.

On the higher band, 11000 calls strike to hold the maximum open interest with more than 44 lakh shares. From the option data, we have been seeing a shifting of the range towards upper band which reflects that market undertone is likely to remain bullish with the support of consistent FII buying and short covering.

Overall market’s cost-of-carry is up on the back of fresh long additions. Among put options, 10300-strike put has the highest open interest of over 50 lakh shares.

On the technical grounds as far we are maintaining above 10200 spot levels current trend is likely to continue towards 10650-10700 moving forward.

Here is a list of top 5 stocks which can give up to 19% return in the short term:

Tata Power Company Limited: BUY| Target Rs111| Stop Loss Rs91| Return 13%

The stock has been trading in a rising channel on the daily and the weekly charts. However, from the last six weeks, the stock has been consolidating in the range of Rs88-96 amid which it has formed rectangle formation.

In Tuesday’s session, it witnessed fresh breakout in prices above the pattern formation along with heavy volumes which is a bullish sign.

The formation is generally traded as continuation pattern of the previous trend. Traders can accumulate the stock in a range of Rs98-99 for the target of Rs111 with a stop loss below Rs91.

Shivam Autotech Limited: BUY| Target Rs112| Stop Loss Rs91| Return 13%

The stock has given a breakout above Rs75 levels in the recent past and has also tested Rs105 levels in a short span of time.

However, since then due to profit booking, the stock has retraced back towards its 50-days exponential moving average (DEMA) and took support around Rs85 levels.

On the weekly interval, the stock has formed a bullish flag formation and has also given a break above the pattern formation this week.

Traders can accumulate the stock in a range of Rs99-101 for the upside target of Rs112 with a stop loss below Rs91.

Shree Pushkar Chemicals & Fertilisers Limited: BUY| Target Rs350| Stop Loss Rs265| Return 19%

The stock has been consolidating in the range of Rs250-280 from almost last two months and formed an ascending triangle formation on the weekly charts.

Additionally, it has formed an inverted head and shoulder formation on the daily charts. This week, prices have given a breakout above both the formation with marginally higher volumes.

Traders can accumulate the stock in a range of Rs294-298 for the target of Rs350 with a stop loss below Rs265.

Dish TV India Limited: BUY| Target Rs95| Stop Loss Rs78| Return 13%

On the daily charts, the stock has been consolidating in the range of Rs78-84 and holding well above its 50 and 100-days exponential moving average.

In Tuesday’s session, the stock witnessed a fresh breakout above the 200-days exponential moving average (DEMA) along with hefty volumes.

Moreover, on the weekly charts, the stock has formed the inverted head and shoulder formation and also given breakout above the neckline of the pattern formation.

Traders can accumulate the stock in a range of 84-86 for the target of 95 with a stop loss below 78.

Chambal Fertilizers & Chemicals Limited: BUY| Target Rs176| Stop Loss Rs143| Return 13%

The stock has been consolidating in a narrow range of Rs135-150 from the last three months and this week, the stock gave a breakout above the key resistance level of Rs150 with relatively larger volumes.

Additionally, the positive divergence on RSI and stochastic indicators on the daily charts also support the next up move in prices in the coming sessions.

Traders can accumulate the stock in a range of Rs155-157 for the target of Rs176 with a stop loss below Rs143.

MORE WILL UPDATE SOON!!