S&P 500 Price Forecast January 15, 2018, Technical Analysis

The S&P 500 has been explosive to the upside during the Friday session, as the US dollar has been drifting lower. I think that the market is now looking to go to the 2800 level above. With the move on Friday, it’s likely that we will continue to see buyers on dips.

 

The S&P 500 went sideways initially during the day on Friday, but as you can see the volatility had picked up. The market has rallied significantly, and we are knocking on the door of 2790. The 2800 level is the next large, round, psychologically significant barrier to overcome, but we have not been able to do so quite yet. I think if we can break above the 2800 level, the market should continue to go much higher. I think at that point, we will probably go to the 2900 level, then eventually the 3000 level which is my year-end target.

Short-term pullbacks are buying opportunities as the offer value in a situation that has been extraordinarily bullish, based upon tax reform, corporate profits, and of course a lot of economic optimism in general. I think that the 2770 level is the short-term floor, but quite frankly even if we break down below there I think there will be plenty of opportunities just waiting to happen. The attitude of the markets will continue to be bullish, and although there will be headlines occasionally the cause issues, this is a good way to get rid of “scared money”, and therefore gives us an opportunity to start buying. This has been a long-term moved to the upside, and I don’t see that changing anytime soon. With the devalued US dollar, it should help exports coming out of the United States, and that of course helps the S&P 500.

MORE WILL UPDATE SOON!!

Nifty Bank Outlook for the Week (Jan 15, 2018 – Jan 19, 2018)

NIFTY BANK:

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

As we have mentioned, last week that 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. During the week the index manages to hit a low of 25527 and close the week around the levels of 25749.

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 & 26100 to 26200 on upside.

MORE WILL UPDATE SOON!!

Nifty Outlook for the Week (Jan 15, 2018 – Jan 19, 2018)

NIFTY:

Nifty closed the week on positive note gaining around 1.10%.

As we have mentioned last week, that 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. During the week the index manages to hit a high of 10690 and close the week around the levels of 10681.

Minor support for the index lies in the zone of 10500 to 10550. Support for the index lies in the zone of 10350 to 10400 where break out levels and short term moving averages are lying. If the index manages to close below these levels then the index can drift to the levels of 10000 to 10100 where break out levels 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 10400 on downside & 10900 on upside.

MORE WILL UPDATE SOON!!

Nifty likely to climb Mount 12K in 2018; 5 stocks which could give up to 30% return

The impact of government's crucial initiatives like demonetisation and GST are fading and the positive impact of these structural measures are likely visible in FY19. Expect around 15-20 percent growth in Sensex EPS in FY19.

  

After phenomenal returns in 2017, the Nifty is expected to rally around 15 percent and hit year-end target of 12,000, Sumeet Bagadia, Associate Director at Choice Broking said.

He expects around 15-20 percent growth in Sensex EPS in FY19 and he is of the view that primary market activity is expected to remain sanguine in 2018.

"ICE Brent crude oil has given a symmetrical channel breakout in December 2017 and expected to witness a strong rally in the first half of 2018. On the higher end price may reach towards USD 77 to USD 85 in 2018.

2017 has been remained spectacular year for the investors with key benchmark Sensex and Nifty giving around 29 percent return, while broader market did even better.

Though the overall return may not be that great in year 2018, we expect positive return in equity mainly on the back of earning improvement. We expect around 15 percent return in equity and our Nifty year-end target is 12,000.

 Macro-economic stability plays a crucial role for sustaining or increasing the benchmark indices' level. Due to the high crude oil prices and reviving commodity prices on global front, upside risks for inflation has increased and low tax collection due to implementation of GST has forced the government to enhance borrowing by Rs 50,000 crore in FY18 which in turn has raised the yield level in economy.

Thereby, inflation, interest rate and fiscal deficit are the crucial macro-economic indicators which can inject significant bearings on investors’ sentiments.

On domestic front include 1) momentum in earning growth 2) progress on GST implementation front 3) any initiative to take petrol and diesel under GST ambit and 4) assembly election in 8 states.

Global front include 1) US relationship with North Korea and 2) emerging political risk in middle-east countries

As many as 153 initial public offers hit the Indian stock market in 2017, raising USD 11.6 billion. During Q4 2017, 22 IPOs hit the market, an increase of 47 percent QoQ in terms of number of deals.

While a record number of firms made their IPO debut in 2017, many key players plan to enter the primary market this year and raise funds for their expansion and growth like Hindustan Aeronautics (HAL), NSE, Aster DM Healthcare, Bharat Serum and Vaccines among others. Thus, we are of the view that primary market activity to remain sanguine in 2018.

The impact of government's crucial initiatives like demonetisation and GST are fading and the positive impact of these structural measures are likely visible in FY19. We expect around 15-20 percent growth in Sensex EPS in FY19.

Current government has created its credibility on the back of its structural reform for reviving the economy. Thus it would be highly unlikely that Budget 2018 will a populist one, however it would be not so reformist especially after the Gujarat state election result. It would be mix of both.

Rural people would be disappointed from the current government due to these three factors

1) Increasing unemployment in rural areas

2) Rising cooking gas and kerosene prices

3) Continued low minimum support prices (MSP) for key food items

 Crude Oil: ICE Brent Crude has ended the year at USD 66.87, up 44 percent from the June low of USD 46.38. The OPEC and Non-OPEC production cut coupled with improving global demand was main reason behind the rally in crude oil price.

However, rising US Crude production has acted the limiting factor throughout the previous year. US crude production hit a 46-year high in October according to an EIA data (monthly). On the other hand, US crude Oil export also rose during the previous year.

Going into the New Year, continuation of production cut by OPEC and Russia to act as support to any fall in crude oil price. In addition, global demand led by China (one of the largest importer of crude oil) is expected to remain strong. Technically, ICE Brent crude oil has given a symmetrical channel breakout in December 2017 and expected to witness a strong rally in the first half of 2018. On the higher end price may reach towards USD 77 to USD 85 in 2018.

Base Metals: The year 2017 had been good for base metals as the base metal pack added 23-34 percent over the last year; led by aluminium (USD 2,268, up 34 percent) and copper (USD 7,247, up 31 percent). The industrial metal copper, often seen as the barometer of global economic condition witnessed the biggest yearly gain in 2017 after 2010. The rising demand backed by strong global data pushed metal prices higher.

Going forward the improved demand coupled with supply disruption in China is going to support the rising copper price. Moreover, technological changes like growth of Electric Vehicles (EVs) will boost the demand for base metals like aluminium (used for car body, minor use in battery), copper (used in winding and rotor) and nickel (used in battery). Technically, all these base metals are trading above the initial reversal ratio (38.20 percent) which suggests further rally in the days to come.

ONGC: Buy at Rs 192.35 & Upto Rs 185.00 | Target Rs 230.00-250.00| Return 25%

On a quarterly chart, the stock has formed a Bullish Harami candlestick pattern which is a bullish reversal formation, apart from this, the preceding candlesticks is trading above the high of Harami candlestick which confirms the reversal of the trend.

On a monthly chart, the stock has given a breakout of its rangebound move in which it had been trading for more than three months which shows that the stock has shifted its range to an upper level.

On a weekly chart, the stock has given a breakout of its upper band of symmetrical triangle formation which indicates a bullish reversal movement in the counter.

A weekly indicator MACD reading is at 6.41 level with a positive crossover, apart from its, MACD is trending above its zero line which points out for a positive breath in the stock.

Amara Raja Batteries: Buy at Rs 834.45 & upto 800.00 | Target Rs 1,040.00-1,073.00| Return 25%

On a monthly chart, after forming a topical high of Rs 1,079.70 level in Sep-16, the stock had corrected its self-up to the level of Rs 666 level, however it clearly seems that the stock has found a strong base at Rs 666 level which is a 50.00 retracement level of its previous bull run from Rs 205 to Rs 1,128 level.

On a weekly chart, the stock has given a breakout of its upper band of Descending spilling channel formation. Moreover, the stock has been trading with its strong support of 21 weeks moving average which shows that near to medium term trend is up and the stock could accelerate its upside movement.

A weekly momentum indicator RSI reading is at 60.54 level with a positive crossover, apart from this, the RSI has given a breakout of its downward sloping trend line which points out for a positive breath in the stock.

SAIL: Buy at Rs 92.70 & upto Rs 87.50 | Target Rs 112.95-117.00| Return 19%

On a yearly chart, the stock has formed a Morning Doji Star candlestick and it is signalling a change in trend from bearish to bullish.

On a weekly chart, after spending weeks in a range bound move, the stock has given a breakout of its upper band of Flag formation with above-average volume which can be considered as a continuation formation.

Even after taking a clue from its 200 weeks moving average, the stock has given a healthy bounce back and has managed to sustain above its upper range with health volume. This type of formation on moving averages, often confirms trend reversal move.

A monthly indicator MACD reading is at 7.71 level with a positive crossover, apart from its, MACD is trending above its zero line which points out for a positive breath in the stock.

UPL: Buy at Rs 755.75 & Upto Rs 725.00 | Target Rs 902.00-1,002.95| Return 29%

In recent months, the stock had given healthy correction from its topical high of Rs 902.50 level, however, this correction paused at Rs 695.10 level which is a 38.20% Fibonacci retracement level of its classic up move from Rs 367.25 level to Rs 902.50 level. This type of structure on Fibonacci retracement level always considers an intermediate trend reversal point where one could make a buy entry with decent Stop-Loss.

Additionally, to support the above context, the stock has formed a Bullish Hammer candlestick with the support of its 21 weeks moving average which can be co nsidered as a bullish reversal formation.

A weekly momentum indicator RSI reading is at 47.91 level with a positive crossover, apart from this, the RSI has given a breakout of its downward sloping trend line which points out for a positive breath in the stock.

JK Cement: Buy at Rs 1,113.70 & Upto Rs 1,055.00 | Target Rs 1,367.70-1,488.25| Return 31%

On a weekly chart, the stock has found a good support at Rs 922 level with the support of its 50 weeks moving average which suggests that the stock is about to spurt its upside movement from the present level. Additionally, a 50.00% retracement level is also providing a good support at the Rs 914-915 level, of its previous up move from Rs 632.70 level to Rs 1,137.60 level.

On a daily chart, the stock has given a breakout of its rectangle formation in which it had been trading since last many days which indicates robust upside movement in the counter from the present level.

A weekly indicator MACD reading is at 33.10 level with a positive crossover, apart from its, MACD is trending above its zero line which points out for a positive breath in the stock.

MORE WILL UPDATE SOON!!

Confused about investing at highs? 10 key themes which are likely to drive markets in 2018

Indian equities remain a high remorse asset that can cause pain during sell-offs and create a fair bit of volatility in portfolios.

   

2017 was a year that will be remembered for rising domestic equity inflows, strong rhetoric on the government’s reforms, and resilient consumer credit spends. As we head into 2018, we highlight key structural themes that will drive markets:

Structural reforms undertaken by the Government will deliver sustainable growth:

Given the heated debate around the topic of structural reforms, we did extensive research on the subject across geographic regions and over the past three decades. The research is clear: reforms invariably lead to growth and a more resilient economy. What’s also clear is a fair bit of pain is experienced in the short term.

Further, the government chose to undertake a wave of reforms in parallel and the inter-related benefits will create additional multiplier benefits. We expect the pro-growth benefits of these measures to unfold over the coming quarters of 2018 and beyond.

The Flattening U.S. Yield Curve Will Not Be a Cause for Concern:

Global growth is accelerating in a synchronized fashion and all developed regions are showing impressive growth momentum. There’s been a fair bit of hand-wringing around the flattening U.S. yield curve.

At a spread of 57 bps between the 10 years and 2 years, the U.S. yield curve is at a stage where the economic momentum could continue for another year or two. The last stage of a bull market can often be a profitable phase. Hand wringing over the yield curve is misplaced, for now, but bears watching in coming quarters.

Inflation Will Remain Contained:

With deflation in technology and crude, disruptive business models that automate and/or eliminate the middleman, inflation has consistently undershot global central bank’s expectations and will continue to do so in 2018.

Domestically, we are starting to see efforts on agri-technology, yield enhancement, and supply chain management. With near-record food grain production and a positive rabi sowing season, food inflation is likely to be contained and remain within the RBI’s glide path.

Contrasting Global Demographics Favor India and Emerging Markets:

Take India’s 425 million Millennials and contrast them with the millions of Baby Boomers. While Millennials are entering their peak spending and consumption years, Boomers are exiting the workforce and transitioning to dis-savings mode.

33 percent of India’s population are Millennials:

That’s the largest concentration of Millennials in the world. China is a close second with roughly a little over 400 million. The oldest Millennials are now 35 years old, and the youngest 13 years old. We don’t think Millennials are that different a generation.

They prefer to own their homes, aspire to leadership positions, wealth, travel, and healthy living. Entrepreneurship is something they’re passionate about, and they are entering the workforce. That translates to consumption and growth.

Unwinding Balance Sheets in Developed Markets Will Pose a Challenge:

Over the past couple of decades, the easy global monetary policy has propelled asset prices higher and driving bond yields lower. This phase is now coming to an end, as central bank balance sheets are stabilizing and are expected to contract in the coming years.

In contrast, the domestic economy remains well positioned with a healthy banking system in the process of repairing the public sector NPA issues.

Ironically, because of the reforms holding back economic growth last year, India remains quite early in terms of the stage in the business cycle relative to developed markets.

Developed markets will face the headwinds of liquidity being extracted from the system, and a hawkish Fed focused on raising rates. In contrast, India with 7.3 percent yields on the 10 year and real yields around 2.5 percent has sufficient headroom to lower interest rates.

Credit Growth: The Data-Driven Inclusive Economy:

Post demonetization and Aadhaar, India has in less than a year transformed the domestic economy into an Aadhaar driven economy. Information on investment accounts, bank accounts, credit cards, mobile phones, and bills will be available to credit agencies.

India has made a dramatic shift towards a data-driven, organized economy. With rising annual per capita income, $1710 currently, the platform is in place for a continued expansion of credit as a percentage of GDP.

Valuations and P/E Multiples:

The rise in equity markets in 2017 has led to concerns about inflated asset prices and high P/E multiples. With the expected pickup in earnings, these concerns will get alleviated.

The low cost of capital will likely continue to keep valuations elevated. However, the kicker from P/E expansion is all but done and it is essential that earnings growth come through for valuations to sustain.

Expected Returns:

As we look ahead into 2018, it’s instructive to review our position at the same time last year. Markets were in a steep sell-off. We felt equities were the most attractive asset class for investments with a three-year horizon and the valuation opportunity in favor of equities was as attractive as at any time since June 2013.

It’s a more difficult call this year, with valuations stretched, unwinding central bank liquidity, and a hawkish Fed intent on rate hikes.

Investors with a suitable level of risk appetite have benefitted strongly over the past few years. We remain of the opinion that India is early to middle stages of a business cycle recovery.

Taking into account the kicker we expect from structural reforms leads us to a favourable view on equities. In particular, well managed active funds have delivered returns far in excess of benchmark returns. We remain favourably disposed towards specialized investment managers.

In contrast, the last few months have demonstrated to debt investors that fixed income can be a risky asset class in a rising rates environment. With bond yields reflecting much of the uncertainty over the fiscal borrowing plans of the government, debt investments are likely to return somewhere between 6-9 percent over the year.

Portfolio Composition:

Our view on Gold remains underweight. We see a limited reason to change our forecast. On a fixed income, we remain positioned in corporate bonds and short-term debt until the rise in rates stabilizes.

Our relative valuation models continue to suggest that prospective returns for equities will be higher than debt over a longer investment time frame. We remain invested in equities and recommend that investors consider adding an appropriate degree of risk to their portfolio.

There is a reasonably strong likelihood of a correction along the way, and tactical asset allocation and protective strategies will be valuable in those periods.

Indian equities remain a high remorse asset that can cause pain during sell-offs and create a fair bit of volatility in portfolios. However, investors that have been willing to accept the risk of volatility have been handsomely rewarded over the past two decades. Staying invested in equities and embracing short-term volatility is likely to continue to prove to be profitable.

MORE WILL UPDATE SOON!!

Make most out of the earnings season using 4 options trading strategies

The price of an option may at times be more sensitive to volatility than to the underlying. To trade this rationally, one should consider deploying a Spread over just naked options.

  

Event trading consists of one of the largest volume in Options after Expiry based trades. Have you ever bought a Call option ahead of results and lost money even though the instrument moved in your favour?

Or have you made less profit even after a large up-move in the underlying? I’m sure you can relate to this phenomenon. Does this mean that the basic principles of Option valuation don't hold true?

Lots of questions and multiple confusions is what a trader hits when it comes to trading results.

Let’s learn a few techniques to help you get odds in your favour:

Consider spreads over Naked Options

A retail trader likes to keep it simple and buys calls/puts naked in expectation of a result outcome. Volatility which is a component of Option pricing is generally dominating ahead of results.

The price of an option may at times be more sensitive to volatility than to the underlying. To trade this rationally, one should consider deploying a Spread over just naked options.

Directional Spreads:

Directional Spreads are generally created by buying a Near Strike option and selling an Out of The Money strike option to get compensated with some volatility short exposure.

This neutralizes the effect of volatility to some extent and still allows the opportunity to trade the event in direction of your choice. However, the profit is now capped but if the instrument expires at or below the sold strike, it still provides you a superior return in absolute terms.

Trade Either-ways Strategies: Straddle, Strangle, Guts, Strap & Strip

Trade Either-ways Strategies when not sure of a direction but sure of a large movement. The beauty of options trading comes with the fact that it’s not mandatory to have a directional forecast.

A forecast that stock will move either up or down but will definitely move large is also a valid forecast to trade. Most of the common Either-ways strategies are: Straddle, Strangle, Guts, Strap, Strip are all limited risk strategies as it consists of buying options.

The only common component to track other than the levels of payoff is the volatility. If the volatility is not quoting too high than its historical trend or is cheaper than the expected outcome, deploying an either-ways strategy can be a great idea.

Trade Oscillation when no major movement is expected:

If we buy a stock in cash market a non-movement does not yield a return but options can still make you money. An expectation of underlying not moving much is also a forecast to trade on.

When options are priced at historically high IV’s and you don’t expect a large movement post the result, oscillating strategies could be the right choice. As company results are events with un-certainty protecting the capital is equally important.

Selling a range and buying the bounds pays off with a limited risk if the underlying remains stagnant post result. The profit range could be widened by deploying strategies like Condors still keeping the risk limited.

MORE WILL UPDATE SOON!!

Top 5 stocks which could turn out to be ‘Dark Horse’ of the year 2018; do you own them?

Investors are better off betting on stocks which can deliver benchmark beating gains.

  

Bulls did not disappoint investors in the first month of the new calendar year as Indian market rose to fresh record highs consistently so far in the month of January.

The rally in Indian markets is not yet over but the money is likely to be made in individual stocks. The risk-to-reward ratio with respect to indices in the short term looks limited, but the current bull run is likely to span out for next 10-15 years.

"We stand at an inflection point whereby there is a high probability that the economy and the markets will shift a gear higher in the year 2018.

The equity markets would increasingly look at earnings delivery given the fact that valuations are robust based on trailing returns. We strongly believe that we are still in the initial stages of a long-term bull market which can span 10 to 15 years.

Investors are better off betting on stocks which can deliver benchmark beating gains. The optimism stems from the fact that earnings are likely to register double-digit gains in the in the FY19.

“We expect strong momentum to continue for equity market over FY19 due to revival in earnings after teething problems of GST, low base of demonetisation, increasing focus of government on infrastructure development even at the cost of fiscal slippage and favourable global headwinds with favourable commodity prices,” Abhinav Gupta, President - Capital Markets, Share India Securities told Moneycontrol.

“Increasing government spend will lead to higher purchasing power and we expect earnings to grow at around 17-18 percent over next year. We maintain our year-end Nifty target at 12,500 in line with current multiples and pricing in the earnings growth over the course of the year,” he said.

We have collated a list of 5 stocks from various brokerage house on stocks which could emerge as a dark horse in 2018 and beyond:

Dr. Reddy’s Laboratories:

CLSA which has an outperform rating on Dr. Reddy’s Laboratories said that Dr. Reddy’s Lab could be a dark horse in 2018 if it is able to monetise its complex products pipeline in a timely manner. The stock has fallen over 21 percent in the calendar year 2017.

Global pharma consolidation will gather steam in 2018 as challenging industry dynamics in the USA drive supplier-side consolidation whereas, in India, the government’s focus on improving quality and good-manufacturing-practice compliance could increase market share at top companies.

Gujarat Gas:

Citigroup sees Gujarat Gas as a Dark Horse in the gas space. Gujarat Gas (GG) is one of India’s largest player in the industrial gas segment and city gas distribution (CGD) with a dominant presence in Gujarat.

The company has been rapidly expanding its reach in Gujarat by way of securing licenses to expand its CGD network across five new areas, making it to 19 districts of Gujarat, Dadra and Nagar Haveli, Thane and Palghar in Maharashtra.

The current rising environmental concerns and the government’s aim to switch to gas-based economy put companies like Gujarat gas in a sweet spot, ICICIdirect said in a report.

“We believe the company’s strong CGD network offers good demand potential due to lower CNG, residential PNG penetration and increased usage of natural gas for industrial volumes,” it said. The domestic brokerage firm has a BUY rating with a target price of Rs1000.

DLF:

ICICI Securities which has a buy rating on DLF sees the real estate player emerging as a dark horse in the next 2-3 years.

DLF is the likely dark horse over the next 2-3 years in the sector, said the report. The promoter stake sale in its rental SPV to GIC Singapore being concluded, DLF is set to receive Rs140-150bn of proceeds by Q4FY18 through promoter fund infusion/QIP which will bring down DLF’s debt by half.

A fresh infusion of money would enable the company to refocus on its strategy in the residential segment, which has been a laggard over the last 4 years.

Tata Motors:

Emkay sees Tata Motors emerging as a ‘Dark Horse’ in the automobile space. Tata Motors would be our dark horse, as currency worries subside and volume growth momentum persists. Among ancillaries, Emkay like Apollo Tyres and Exide Industries, it said in a report.

The Indian automobile industry is in a sweet spot on the back of a cyclical recovery across segments. Rural India is turning out to be the growth frontier for the automobile industry, as near-normal monsoon for 2 years and receding effect of demonetization have bolstered consumer confidence.

Dynemic Products Ltd:

Rudra Shares and Stock Broking who has an Accumulate recommendation on Dynemic Products Ltd. The company is a leading global manufacturers & distributor of Food Colors, Lake Colors, and Blended Colors & US-FDA certified FD&C Dyes.

The future of Dyestuff and Dye Intermediates has good prospects in the coming years owing to its high demand. The growth of dye sector in the future will continue to depend on the performance of end-user industries like paints, textiles, printing inks, paper, plastics, and foodstuffs, said the report.

Food Processing Industries is increasing at a high growth rate in almost every country thus opening the door for the high demand for products that increases the shelf life of processed food. So the overall demand for the antioxidant is expected to increase in coming years.

MORE WILL UPDATE SOON!!

Fresh breakout may take Nifty to 10,900; 2 stocks which could give up to 15% return

The projections indicate that Nifty is all set to fire up towards the 10,850-10,900 zone. While any decline towards the 10,575 mark should be a healthy opportunity to re-enter which is the crucial near-term support for the Nifty.

The New Year cheer extended to the second consecutive week in a row in the year 2018 as the benchmark indices once again closed at fresh lifetime highs. We may call it a pre-Budget rally or positive global wave but what is evident is that the momentum continues to persist.

For the past few days, the Nifty50 has been trying to digest the rally from 10,400 to 10,600 in the previous week. These are healthy signs as even when the index is consolidating it is managing to hit fresh highs.

What’s more intriguing is that the weekly chart is pointing out at another fresh breakout. The projections indicate that Nifty is all set to fire up towards the 10,850-10,900 zone.

While any decline towards the 10,575 mark should be a healthy opportunity to re-enter which is the crucial near-term support for the Nifty.

Bank Nifty, on the other hand, is the pain point at the current juncture. The index did manage to break out a fresh from a Symmetrical Triangle pattern.

Now, the current price behaviour shows that the breakout may turn out to be a false one. However, as long as Bank Nifty holds above the rising trendline support zone of 25,400 long positions can be held on to.

Here is a list of top two stocks which could give up to 10-15% return in short term:

Tata Chemicals: Target Rs845| Stop Loss Rs737| Returns 10%

Tata Chemicals has been consolidating for the past ten weeks and has finally broken out from a classic continuation pattern on the weekly chart.

The price breakout has also been accompanied with a smart uptick in traded volumes. With the previous trend being a solid uptrend, we expect the stock to resume and extend the momentum further.

Other momentum oscillators along with relative strength also indicate that the current up move is here to stay. We expect Tata Chemicals to rally higher towards its potential target of Rs 845.

Delta Corp: Target Rs 363| Stop Loss Rs 298| Returns 14%

Delta Corp has been consolidating for the past twelve trading sessions and has finally broken out from a sideways phase. The stock has formed a bullish engulfing pattern on the daily chart with a large uptick in traded volumes.

Our weekly chart analysis indicates that Delta Corp is on the verge of a Flag pattern breakout. Projections indicate that stock can rally towards its potential medium-term target of Rs 363. Stop loss should be kept at Rs 298.

MORE WILL UPDATE SOON!!

Expect midcap outperformance to continue; hope taxes aren’t tinkered with in Budget: Macquarie

GST is already there and people are coping with these taxes. Along with this, businesses such as cigarettes have gone through a double whammy. This year should not be about tinkering with tax rates.

   

Midcap stocks witnessed a stellar rally last year with the Nifty and BSE midcap index returning 46-50 percent in 2017. They were seen as one of the major reasons behind the market clocking fresh highs last year.

So, will the streak continue in this year? Macquarie Capital Securities strongly believes so. “Midcaps will perform strongly…in the near term, there could be some surprises in IT and pharma names. This could be a year where smaller businesses do well,” Sandeep Bhatia, Head of Equity-India at Macquarie Capital Securities told CNBC-TV18 in an interview.

Speaking on different sectors, Bhatia believes non-banking financial companies (NBFCs) are richly-valued. “They have gone through a bubble phase and we would want to stick to larger banks. PSU banks should do well. In the housing finance space, we are sticking to HDFC.

Meanwhile, in information technology (IT), he feels BFSI segment could take two quarters to come through, but margins need to be taken a look at. He prefers Infosys and in the broader BFSI space, he expects year-end to be much stronger.

Bhatia expects private capital expenditure to come after a year or so, while government spending is happening right now. He likes Larsen & Toubro and expects cash flow and RoE improvement going forward. A good quarter is in sight for the firm, he said.

So, what are the big expectations from the Budget? Will the Centre bring in long-term capital gains (LTCG) tax on equities and will that weigh on the bull market? The bull run is driven by earnings and global events, he said.

On the taxation part, he believes no taxes should be changed this year. “GST is already there and people are coping with these taxes. Along with this, businesses such as cigarettes have gone through a double whammy. This year should not be about tinkering with tax rates.

MORE WILL UPDATE SOON!!

Buy, Sell, Hold: 5 stocks are on analysts’ radar on January 12, 2018

TCS, IndusInd Bank and MAS Financial Services, among others, are being tracked by investors on Friday.

  

Tata Consultancy Services

Deutsche Bank: Rating - Buy | Target - Rs 3,000

As December quarter results were in-line, which means the recovery is on track, Deutsche Bank said while maintaining Buy call on the stock with a target price of Rs 3,000 per share.

Ex-BFSI (banking, financial services and insurance), company has reported a strong revenue growth of 2.4 percent QoQ while the robust growth in digital revenue and turnaround seen in retail & CPG are key positives, the research house said.

However, the decline in Asia Pacific revenue and muted revenue growth in Americas are key negatives, it added.

Management expects BFSI to improve in 2018.

Kotak Securities: Rating - Reduce | Target - Rs 2,700

Kotak Securities has maintained its Reduce rating on the stock, but upped target price to Rs 2,700 due to rollover and marginal change in multiple.

Numbers were in-line on growth & profitability. FY19 setup looks promising and current valuations bake in cyclical uptick, it said.

The research house made a few changes to EPS resulting in 1 percent cut.

Credit Suisse: Rating - Neutral | Target - Rs 2,350

Credit Suisse also said Q3 numbers were in-line, with retail segment bouncing back but not financial services.

It feels the management sounds comfortable with the outlook barring financial services but the growth momentum continues to be soft in the US.

TCS reported 10 basis points expansion in margin at 25.2 percent for Q3. Margin may fall short of targeted range of 26-28 percent on currency woes in FY18, Credit Suisse feels.

UBS: Rating - Buy | Target - Rs 3,000

While maintaining Buy rating on the stock with a target price at Rs 3,000 per share, UBS said numbers were in-line, with retail segment picking up but banking declining.

It expects muted reaction to results and concerned about decline in banking segment.

Sharp decline in IT services spending may result in downward revisions to earnings estimates, it feels.

Management expects retail to return to double digit growth and is confident of achieving 26-28 percent constant currency margins.

JP Morgan: Rating - Neutral | Target - Rs 2,700

While retaining neutral rating with a target price at Rs 2,700 per share, JPMorgan said Q3 results were in-line with estimates and weakness in BFSI dragged revenue growth.

Current valuation appears punchy, factoring in hopes of a demand improvement.

IndusInd Bank

Brokerage: Macquarie | Rating: Outperform | Target: Raised to Rs 1,962

Macquarie said that the bank continues to report steady, in-line numbers. Further, acquisition of Bharat Financial Inclusion is progressing smoothly & likely to be completed by Q2FY19. It also observed that CASA deposits forming 43% of overall deposits is very positive. Bharat Financial merger and non-CV retail growth and proposed insurance foray as key catalysts.

Brokerage: Nomura | Rating: Buy | Target: Rs 1,950

Nomura said that sharp uptick in vehicle loan growth & strong CASA growth were key highlights in Q3. Further, SMA-2 book of less than Rs 1,000 crore provides comfort w.r.t divergence-related negative surprises. An improvement in credit RWA/loans aiding further margin improvement. The bank is also fast closing its liability gap with larger private banks.

Brokerage: Kotak Sec | Rating: Reduce | Target: Rs 1,750

Kotak Securities observed that retail segment shone, while yields were under pressure. A strong overall performance was seen and broadly stable trends were seen in impairment ratios. Current valuations are closer to fair value even as business remains on a strong footing.

Brokerage: Quant | Rating: Accumulate | Target: Rs 1,994

Quant said that margin remained stable primarily from improvement in liability franchise. Meanwhile, asset quality was stable with total stress on the book increasing 6 bps qoq. It remains constructive on bank considering healthy & stable performance outlook. Slowdown in loan growth & further stress in asset quality are key risks.

Brokerage: Citi | Rating: Buy | Target: Rs 2,060

Citi said that the bank continues to see strong operating trends across balancesheet growth. The firm its top pick in Indian financial sector.

Brokerage: Prabhudas Lilladher | Rating: Buy | Target: Cut to Rs 1,915

The brokerage observed that CASA continues to grow but growth intensity was lower due to demonetisation base effect. Lower corporate slippages led to lower credit cost of 60 bps, it added.

MAS Financial

Brokerage: Motilal Oswal | Rating: Initiate Coverage | Rating: Rs 740

The brokerage house said that the company is an efficient player in high product segment. It expects the company to deliver 25% AUM over fy17-20, resulting in 25% EPS CAGR. Further, better margin, op efficiency & controlled credit cost may drive roa improvement of 60 bps. It believes that the company has all the ingredients of a good investment.

Sun TV

Brokerage: BofAML | Rating: Initiate Coverage with Buy

The global research firm expects subscription growth to pick-up to 24% cagr for the next 3 years. Further, upside optionality from NewRIO (Reference Interconnect Order) Regulation/IPL.

Shree Cement

Brokerage: Emkay | Rating: Buy | Target: Rs 22,001

The brokerage said that expansion will drive growth. But, operating performance is below our estimate. It has downgraded FY18/19/20 EPS estimates by 17.6%/13.3%/13.1% to factor in energy costs. It prefers the company due to its efficient cost structure and superior capital allocation.

MORE WILL UPDATE SOON!!