Does correction on D-St warrant a portfolio reshuffle? 12 stocks to buy

 top buys in the large caps space include names like Maruti Suzuki, ICICI Bank, Motherson Sumi, HPCL, Hindalco Industries, Aurobindo Pharma, Bharat Electronics and Ashok Leyland.

The Nifty50 corrected 5.7 percent from its lifetime high of 11,130 (on January 29, 2018), led by global sell-off and on profit booking by the market, post introduction of Long Term Capital Gains (LTCG) tax in Union Budget FY19, IDFC Securities said in a note.

The budget focused on rural growth, infrastructure push, employment creation, MSME (Micro, Small and Medium Enterprises) support and social welfare, which was in line with expectations and is expected to support lower income groups in general.

The domestic brokerage firm believes that two themes would predominantly play out as the economy recovers: a) Asset-heavy and export-oriented industries would do well as the global economy recovers and consequently, the valuation gap between asset-heavy and asset-light industries would narrow further, and b) Consumption being the strongest component of GDP will continue to see growth impetus from retail credit.

Moreover, the recent reduction in tax rates for companies operating in the discretionary consumer sector will boost overall consumption.

Consequently, IDFC Securities is Overweight: Engineering and Capital goods, Construction, Metals & Mining, Oil & Gas, Consumer Goods, Automobiles, Media, and Pharmaceuticals; Neutral: Banks, Cement, Chemicals, Power and IT; Underweight: Real Estate and Telecom.

IDFC Securities has made some changes in its portfolio of stocks. It replaced SBI with ICICI Bank within top picks, and ONGC with Maruti Suzuki India Ltd.

IDFC top buys in the large caps space include names like Maruti Suzuki, ICICI Bank, Motherson Sumi, HPCL, Hindalco Industries, Aurobindo Pharma, Bharat Electronics and Ashok Leyland. In the small and midcaps space stocks such as Kajaria Ceramics, SpiceJet, Ashoka Buildcon, and Greenply Industries are looking attractive.

Here is a list of top 12 stocks 

Maruti Suzuki: Buy | Target: Rs 10,500

As Maruti Suzuki continues to gain market share, it again underpins its strong competitive position. Successful product launches coupled with declining competitive intensity reinforces the company’s dominance in the market.

While profitability has been weak in the Q3 FY18, going forward we expect margins to improve on the back of better operating leverage and an improving product mix.

Also, the company will start production of batteries FY 20E onwards in a joint venture with Suzuki, Toyota, and Denso, with increasing focus on electric vehicles.

IDFC Securities values the company at 26x FY20 led by stronger earnings visibility (royalty payments are likely to decline with logistic savings on vendor localization and fast ramp-up of Gujarat plant).

ICICI Bank Ltd: Target: Rs 390

IDFC Securities added ICICI Bank to their top picks as it believes: a) Slippage going ahead will be less volatile compared to what we observed in the previous years, b) margins have bottomed out. Moreover, ICICI Bank has managed volatility in stress loans better than other private corporate banks.

Also, the loan growth continues to be healthy (domestic loans grew by 16 percent YoY and 6 percent QoQ in Q3 FY18). With latest earnings release, we have revalued non-banking subsidiaries with a value of core business at 1.3x PBV FY20E, thereby increasing our target price to Rs 390.

Motherson Sumi Systems: Target: Rs 425

Motherson Sumi expects to achieve its revenue target of USD 18 billion a year before than earlier targeted for 2020. Also, in the last few years, SMR/SMP have consistently gained market shares across product segments and the company has entered new verticals with the acquisition of PKC.

Moreover, further growth drivers persist as (a) the company has enough whitespaces to grow with existing customers, b) overall growth in the premium car market is likely to outstrip lower-end vehicles, c) content per vehicle continues to rise with the share of electronics improving.

HPCL: Target: Rs 515

IDFC Securities believes that improved refinery configuration, higher marketing margins, and rising cash flows do not yet reflect in HPCL’s valuations.

In refining, the brokerage house believes that the reasons for miss compared to estimates in Q2 will not spill over into H2 and the improving distillate yields, higher sulphur crude and improving configuration should lead to GRMs sustaining at over USD 7/bbl (FY18-20E).

While growth in marketing volumes remains below historical levels, OMCs are expected to benefit from higher-margin LPG replacing lower-margin kerosene over FY18-19E. Moreover, with ONGC taking a stake in HPCL, if ONGC allows HPCL to absorb MRPL, the overall refining complexity of HPCL would see a sharp improvement.

Hindalco Industries: Target: Rs 346

With clarity on aluminium hedging volumes and prices in FY19 and its CoP peaking soon, we expect Hindalco’s (HNDL) EBITDA to rise 29 percent YoY to Rs 78 billion in FY19E from its India operations. Moreover, Novelis’ sustainable EBITDA guidance of USD 375-380/t provides comfort on its future earnings.

Hindalco’s capex plans in value addition and alumina expansion are key positives. We have not factored in any probable acquisition by Novelis in our estimates. Post Q3 FY18 earnings, IDFC Sec have rolled over their valuation to FY20E earnings to arrive at a target price of Rs 346 (earlier Rs 322).

Aurobindo Pharma: Target: Rs 944

Aurobindo reported steady earnings growth versus most peers in FY17-18, disproving apprehensions on the company’s US generics focussed business model. The company’s US sales grew 28 percent QoQ to USD 327 million in Q2 FY18, aided by gRenvela launch.

We estimate 13 percent CAGR from US sales over FY17-20E to USD 1.45 billion in FY20E, despite likely erosion in oral solid dosage (OSD) portfolio. Growth in US sales will be driven by 33 percent CAGR in injectables, new niche OSD launches and scale-up in Natrol and OTC segments over FY17-20E

Additionally, EU profitability will drive 11 percent PAT CAGR over FY17-20E with significant operational cash generation. Aurobindo is our top pick in the largecap pharma space.

Bharat Electronics Limited: Target: Rs 220

BEL is well-positioned to capture the growing defence spend, led by its strong manufacturing capabilities and R&D focus. Accordingly, IDFC Securities expect order intake momentum to sustain at Rs150bn on an annual basis over the next few years, providing strong revenue visibility with a current order backlog of Rs 405 billion (4x FY18E revenues).

As execution picks up (22 percent revenue CAGR over FY17-20E), we expect margins to remain stable, led by positive operating leverage.

While the near-term earnings growth is impacted by lower other income (buyback and lower yields, 3  percent growth in FY18E), IDFC Sec expects long-term earnings trajectory to be strong (18 percent CAGR over FY18-20E).

The stock trades at attractive valuations along with sustained order inflows, long-term earnings potential, and improvement in return ratios.

Ashok Leyland Ltd: Target: Rs 138

We believe the CV cycle has not peaked and expect volume growth recover in H2 FY18E. We expect a) an improvement in mining/road construction sectors, b) stringent regulation on overloading in UP, and c) defence tenders to drive growth.

Moreover, we are convinced about Ashok Leyland’s improving competitiveness and increased focus on exports/LCVs, which we believe de-risk its business. We expect these initiatives to drive revenues (12 percent CAGR over FY17-20E, backed by 8 percent M&HCV volume growth and 4 percent improvement in price realization) while reducing cyclicality over FY17-19E.

Kajaria Ceramics: Target: Rs 776

IDFC Securities believes that organised players will continue to gain market share from unorganised players, led by GST implementation (tax compliance) in the medium term.

However, in the near term, unorganised players have gained given the delay in the introduction of the e-way bill. This along with a sharp increase in fuel prices has led to cut our estimates sharply.

IDFC Securities now estimate 14.6 percent volume CAGR (depressed base) and strong 27.5 percent earnings CAGR over FY18-20E on the back of operating leverage kicking, JV issues getting sorted and higher contribution of sanitaryware/faucet division.

With industry-leading market share, margins and high return ratio profile, we expect the stock to command industry leading multiples (provided growth does not decelerate).

SpiceJet: Target: Rs 173

SpiceJet continues to invest in rebuilding its brand and in improving its service offerings. Its bold route strategy involves a greater focus on non-trunk routes, has strong growth prospects and is already earning the company better yields. Driven by 21.5 percent/24.9 percent RPKM/revenue CAGR and stable gross spreads, we expect 26 percent/32 percent EBITDA/EPS CAGR for SpiceJet over FY17-19E.

Also, we believe SpiceJet’s balance sheet will continue to strengthen with strong cash generation (expect net cash position by Mar 2019). The stock trades at 8.1x FY19E EV/EBITDAR and we value SpiceJet at 9.3x FY19E EBITDAR (5  percent discount to multiple assigned to IndiGo).

Ashoka Buildcon: Buy | Target: Rs 312

IDFC Securities believes that organised players will continue to gain market share from unorganised players, led by GST implementation (tax compliance) in the medium term. However, in the near term, unorganised players have gained given the delay in the introduction of the e-way bill.

This along with a sharp increase in fuel prices has led to cut our estimates sharply. IDFC Securities now estimate 14.6% volume CAGR (depressed base) and strong 27.5 percent earnings CAGR over FY18-20E on the back of operating leverage kicking, JV issues getting sorted and higher contribution of sanitaryware/faucet division.

Greenply: Target: Rs 390

IDFC Securities expects Greenply to benefit from the recent boost in GST (lowered to 18  percent), which will accelerate the shift in market share towards organised players. Also, ongoing revival in real estate will aid growth, in our view.

Moreover, its MDF and plywood units are expected to come on stream from mid-FY19E. With its new MDF plant, Greenply will own almost ~45 percent of India’s MDF capacity and with increasing adoption of MDF in India, Greenply is poised to grow well in the medium term.

IDFC Sec thus expects Greenply’s earnings to double over FY17-20E with most of it being back-ended (FY18 to be a challenging year given GST implementation and ply wood capacity peaking out). We estimate over 25 percent growth in FY20E/21E.

MORE WILL UPDATE SOON!!

Stay with winners! Sensex loses 1000 points in a week; top 40 stocks which rose up to 30%

The valuation of India market still remains to be rich; hence, any correction owning to global volatility should be used as a buying opportunity to dig into quality stocks.

The S&P BSE Sensex lost over 1,000 points while the Nifty50 dropped a little over 300 points in a week marred by global volatility but there were plenty of stocks which braved the fall.

The correction which started from New York extended to Japan, China and then to the Indian market. The S&P BSE Sensex plunged 3 percent translates into the worst decline since August.

The market continued to witness selling pressure throughout the week largely on the concern of higher inflation, potential tightening of liquidity, rising bond yields and sell-off in global markets.

The valuation of India market still remains to be rich; hence, any correction owning to global volatility should be used as a buying opportunity to dig into quality stocks. Corrections will help bring some stability to the valuations front as well.

“Current decline was due to mixed emotions of all LTCG, global sell-off, and overvaluations. At this steep correction, we think it is time to add some of the quality stocks like Himadri Chemical, Graphite, Rain industries in Chemicals sector which have corrected a lot and there is a huge potential left,” Chirag Singhvi of KIFS Trade Capital told Moneycontrol.

“Dalmia Bharat, L&T, TCS are the pioneer in their industry and a good buy at the current market price for value investing. Titagarh Wagons is available at cheap valuations with the good dividend yield, he said.

There were plenty of stocks from the S&P BSE 500 index, the S&P BSE Midcap index and the S&P BSE Smallcap index which braved the fall and rose up to 30 percent in a week which spelled ‘Bloodbath’.

The benchmark indices lost 2.8 percent for the week ended 9 February; however, some buying interest was witnessed in the mid & small cap stocks post a recent sharp correction.

Plenty of stocks in the S&P BSE Smallcap index rose up to 30 percent which includes names like Surya Roshni, followed by Excel Industries, Bombay Dyeing, Lumax Industries, FDC, Arshiya, Gulf Oil etc. among others.

In the S&P BSE 500 index Bajaj Electricals, HEG, Rain Industries, Fortis Healthcare, Jet Airways, 8K Miles, Shankara Building Products, SAIL, Polaris Consulting rose 10-20 percent in the week gone by.

In the midcap space, Reliance Capital put out a strong show post Q3 results. The stock closed the week with gains of 13 percent, followed by Bharat Forge which gained 10 percent, Ashok Leyland rallied 10 percent in the same period.

MORE WILL UPDATE SOON!!

Equity gave stellar returns despite fall; 9 MFs which gave up to 20% return every year

Investing in equity mutual funds is always advocated via a Systematic Investment Plan (SIP). It takes out the need to accurately time the market as well as the urge to act on your emotions.

If someone asked you what the hardest part of investing is, what would you say?

It could be as rudimentary as getting started, or as elaborate as arriving at the fair value estimate of a stock. Alternatively, it could be figuring out an optimal investment policy or deciding whether to kick your fund to the curb. There is no right answer.

However, I would like to suggest one that tries and tests the resolve of virtually every investor.

Doing Nothing.

I have not read a more eloquent explanation than the one offered by Charles Ellis in his book ‘Winning the Loser’s Game’: Sustaining a long-term focus at market highs or lows is notoriously difficult.

It’s a time when emotions are the wildest when action appears most demanding and the “facts” most compelling. Staying rational in such an emotionally charged environment is extraordinarily difficult.

But, is also extraordinarily important because the cost of infidelity to your own commitments can be very high.

In a bull run, it seems extremely enticing to throw caution to the wind, discard your pre-determined asset allocation, and wholeheartedly pump money into stocks that promise to sizzle and can only go one way: Up.

In a slump, it is critical to sit back and do nothing while your portfolio loses value. But, here’s something to remember; it is only a notional loss until you actually act on your impulse to sell.

Does it mean you should never sell? Of course not. The point I am making is not to impulsively sell a good investment just because the market has tumbled and the buzz is that it is never going to climb back again.

This is precisely one of the reasons investing in equity mutual funds is always advocated via a Systematic Investment Plan (SIP). It takes out the need to accurately time the market as well as the urge to act on your emotions.

Let’s look at how a monthly SIP would have functioned over the years. If we look only at data which dates back 5 years, it won’t throw up a very accurate picture. But, if we take it over a 10-year or 13-year time frame, we cover ample terrain.

This period would cover the market high of 2007 and January 2008, the massive slump, the rally in 2010, the dip again in 2011 to be followed by a run up again.

Annualized Returns of 10-year Monthly SIP ending on December 29, 2017

Are there gaps between the best and the worst performers? Of course, yawning gaps. But, the point being made here is that in the end, equity delivered. All that was required of the investor was to do nothing during all the upheavals but diligently continue with the SIPs.

I have so often read this statement that describes flying a small airplane: “It is hours and hours of boredom punctuated by moments of sheer terror.” While one can argue that it even applies to life, investing can also be thought of along the same lines.

Doing nothing may sound like terrible advice. But long-term investing is about doing nothing 99% of the time.

In fact, the world renown investor Seth Klarman is known to have said that the greatest edge an investor can have is a long-term orientation.

If you manage to keep your wits around you when everyone is either getting euphoric or losing their cool, you will ultimately emerge the winner.

MORE WILL UPDATE SOON!!

Nifty Bank Outlook for the Week (Feb 12, 2018 – Feb 16, 2018)

NIFTY BANK:

  

Nifty Bank closed the week on negative note losing around 3.70%.

As we have mentioned, last week that support for the index lies in the zone of 26400 to 26500 where break out levels are lying. If the index manages to close below these levels then the index can drift to the levels of 25700 to 25800 where break out levels and short term moving averages are lying. During the week the index manages to hit a low of 25024 and close the week around the levels of 25480.

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 24400 to 24500 where long term moving averages are lying.

Minor resistance for the index lies in the zone of 25700 to 25800. Resistance for the index lies in the zone of 26200 to 26300 from where the index has opened gap down. If the index manages to close above these levels then the index can move to the levels of 26700 to 26900 where trend-line joining earlier highs is lying.

Range for the week is seen from 24400 to 24500 on downside & 26200 to 26300 on upside.

MORE WILL UPDATE SOON!!

Nifty Outlook for the Week (Feb 12, 2018 – Feb 16, 2018)

NIFTY:

  

Nifty closed the week on negative note losing around 2.80%.

As we have mentioned last week, that support for the index lies in the zone of 10600 to 10700 from where the index broke out of trend-line joining highs formed in the month of September-2016 and August-2017 is lying. If the index manages to close below these levels then the index can drift to the levels of 10400 to 10500 where break out levels and short term moving averages are lying. During the week the index manages to hit a low of 10276 and close the week around the levels of 10455.

Support for the index lies in the zone of 10400 to 10500 where break out levels and medium 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 the index has taken multiple supports in the month of November-2017 & December-2017 and long term moving averages are lying.

Resistance for the index lies in the zone of 10650 to 10750 from where the index has opened gap down. If the index manages to close above these levels then the index can move to the levels of 10900 to 11000 from where the index broke down after consolidation.

Broad range for the week is seen from 10000 on downside & 11000 on upside.

MORE WILL UPDATE SOON!!

Top buy & sell ideas for February 8

We recommends buying Ashok Leyland with a stop loss of Rs 128 and target of Rs 142, a buy on NIIT Tech with a stop loss of Rs 830, target of Rs 860 and a sell on Bank of India with a stop loss of Rs 145, target of Rs 132.

  

The Nifty futures on the Singaporean stock exchange were trading higher by around 47 points at 10,498, a rise of around 0.45 percent. This indicates that the domestic market is likely to open on a positive note.

Buy Ashok Leyland with a stop loss of Rs 128 and target of Rs 142

Buy NIIT Tech with a stop loss of Rs 830, target of Rs 860

Sell Bank of India with a stop loss of Rs 145, target of Rs 132

Sell Lupin with a stop loss of Rs 815, target of Rs 785

Sell Hexaware Tech with a stop loss of Rs 360, target of Rs 345

Buy HDFC with a stop loss of Rs 1790, target of Rs 1840

Buy PC Jeweller with a stop loss of Rs 382, target of Rs 415

Buy Maruti  Suzuki with a stop loss of Rs 9000, target of Rs 9175

Sell Hindustan Unilever with a stop loss of Rs 1332 and target of Rs 1275

Sell Vedanta with a stop loss of Rs 327 and target of Rs 295

Buy Asian Paints with a stop loss of Rs 1109 for target of Rs 1144

Buy CESC with a stop loss of Rs 968 for target of Rs 998

Buy BPCL with a stop loss of Rs 482 for target of Rs 512

Buy TCS with a stop loss of Rs 2950 for target of Rs 3025

Buy Tata Global Beverage with target at Rs 295 and stop loss at Rs 270

MORE WILL UPDATE SOON!!

Sale on D-St, are you shopping? Top 50 stocks which could give up to 75% return in 1 year

The setup looks ripe for investors who want to be in Indian equity markets for the long term. Investors should buy those stocks where the growth visibility is high as against the ones which have fallen more, suggest experts.

  

After buoyant equity markets seen in the year 2017, Indian markets witnessed a selloff, a much awaited one post Budget where stocks from the S&P BSE 500 index corrected up to 50 percent in just one week.

Stocks which have suffered a double-digit cut include names like Vakrangee (down 58%), PC Jeweller (down 30%), Fortis Healthcare (down 27%), Just Dial (down 27%), Reliance Naval (down 27%), and IFCI (down 25%) among others.

The S&P BSE Sensex has fallen nearly 2000 points in the same period while the Nifty50 lost nearly 600 points in the same period.

The fall was largely led by both domestic and global factors. On the domestic front, the rise in crude oil prices, fiscal slippage, the rise in interest rates and long-term capital gains tax (LTCG) weighed on sentiment.

Considering that inflation is likely to rise further from hereon as suggested by the monetary policy committee statement, it is unlikely that interest rates will go down.

On the contrary, we are in the era of rising interest rates scenario & the same thing is happening globally. If this trend continues and globally interest rates firm up, it makes India less attractive market in the near-term to attract fresh flows.

We feel that markets may see some more consolidation at the current levels. However, some stocks & sectors can give more returns from the current level as compared to broad markets.

Globally, rising bond yields and fear of US Fed raising interest faster than expected led to some churn in Wall Street which led to a fall of near 1600-point drop in Dow earlier in the week.

The setup looks ripe for investors who want to be in Indian equity markets for the long term. Investors should buy those stocks where the growth visibility is high as against the ones which have fallen more, suggest experts.

A massive fall in a stock does not account for it being a value play. Instead, investors should hunt for those stocks which stand to benefit from the reforms tabled by the finance minister in the Budget 2018.

Laregcap stocks are a better play at current levels while investors should remain cautious while putting fresh money in the midcap stocks at current levels.

Based on risk-reward ratio, Nifty looks better off than the Midcap Index as the upside potential of both is similar i.e. 15-16 percent. “The risk-reward ratio of Mid Cap Index could look attractive with another 5-6% correction from current levels. Based on valuations the potential downside in Nifty works to 5% and that of the Mid Cap Index works to 12%.

Though there are individual stocks in the midcap space that have already corrected and can be accumulated at current levels and also declines..

Corrections are part of every bull market and as long as Nifty is holding above its key support levels, the upside remains intact. Investors should use dips to buy into quality stocks on every dip.

History suggests that in a bulls market, 10 percent type of correction is alright. A meaningful dip also helps investors to jump in who were waiting on the sidelines. But, making money will not be easy in 2018 unlike the year 2017.

My sense is that our markets would remain volatile till there is stability in the Global Markets and VIX settles down. It is difficult to gauge the extent of correction but a 10% fall in the index is considered normal in a bull marke.

Investors should stick to quality stocks rather than eyeing the high beta names. One thing which investors should avoid is to stop their running systematic investment plans (SIPs) and instead focus on accumulating stocks from those sectors which are likely to benefit most from Budget.

Ups and downs are part of the market and these are necessary for keeping the market healthy and buoyant. While stocks have seen good corrections in the market fall, it seems to be warranted given the sizable rally in the past 12 month.

Emerging markets are likely to perform better than developed markets, and among emerging economies, India stands out due to the various reforms especially the forward-looking GST implementation this government has done.

Few sectors we are positive on are, Specialty Chemicals, Infrastructure, Auto ancillary, discretionary consumption, textile and real estate ancillary companies.

SHOPPING LIST:

APL Apollo tubes, Century textiles, Dalmia Bharat, L&T and Maruti Suzuki.

It will depend on the individual stock credentials. However, we feel that stocks which have fallen less or have not fallen at all (eg. Ashok Leyland) are more resilient & were not driven by speculative money.

Companies with good businesses & good management generally do well in the long term and are also able to weather big corrections. Largecap stocks with least correction are expected to outperform markets in medium to long term. One needs to look at future earnings potential for the stock selection.

MORE WILL UPDATE SOON!!

Use rallies to short Nifty; 4 stocks which can give up to 17% return

If Nifty manages to hold 10,270 levels, we may expect the index to consolidate. The immediate and strong hurdle for Nifty is placed around 10620, and any close above the same will lead to strong short covering in the index.

  

The index closed the day at 10476.7 on Wednesday with a minimal loss of 21.55 points after a volatile session and formed a bearish candle pattern on the daily chart.

The index has corrected nearly 7 percent from the recent highs and is currently trading near its strong support. The index has immediate support placed at 10360 which is its 100-DMA and below that 10270.

If Nifty manages to hold 10,270 levels, we may expect the index to consolidate. The immediate and strong hurdle for Nifty is placed around 10620, and any close above the same will lead to strong short covering in the index.

On the options front, highest open interest is placed at 10000 PE followed by at 10500 PE so 10,000 will act as a strong support in the month of February and on the higher side 11500 CE has highest open interest followed by 11000 CE.

In the recent past, we have witnessed long unwinding along with short built up in Nifty suggesting bears are having control at the moment.

We expect volatility to extend further and one need to trade with strict stop losses as it is a buy on the dip and sell on rising market for near term.

Currently, the index has strong resistance at 10620. Traders can initiate shorts on every rise with keeping a stop loss above 10620 and immediate support formed near 10270 so these level can be used as buying stop loss on the downside.

Here is a list of four stocks which can give up to 17% return in short term:

Eicher Motors: BUY | Target Rs 30900| Stop Loss 26100| Return 11%

The stock is trading in a rising channel pattern on the weekly charts. The stock has corrected recently from the higher band of the channel. Currently, the stock is hovering near the lower band of the channel. We have witnessed strong buying activity on lower levels.

Also, the stock has formed AB=CD bullish pattern on the daily charts and is also trading in positive divergence on the daily chart which suggests that near-term bottom has formed and the stock is all set to fly northwards.

Considering technical setup, one can initiate a buy call on the stock at current levels to any dip near 27100 for the target of 29900-30900 and a stop loss below 26100 on a closing basis.

Godrej Consumer: BUY | Target Rs 1130 | Stop Loss Rs 970| Return 12%

In the recent fall, the stock has corrected from its lifetime high of 1128. It took support at 78.60% retracement support from the previous low of 970.

On the monthly chart, the stock is trading supper uptrend forming higher top higher bottom formation with good volume. On the daily chart, the stock is trading near previous breakout zone and trying to move higher as volume going up day by day.

The momentum traders can take a position in the counter at current levels to any dip near 900 for the targets of 1130 and a stop out level can be kept below 970 on a closing basis.

JM Financial: BUY | Target Rs 190 | Stop Loss Rs 140 | Upside 17%

The stock is trading in a strong uptrend since long and the recent correction from the top can be considered as a healthy correction because it has taken support at 68.20% retracement zone from August low.

In the recent fall, the stock recovered quickly after touching the same previous low and moved again above all strong DMA’s showing strength. On the higher side, the immediate hurdle is seen at 171 levels crossing above the same we may expect 180 levels.

Traders can initiate a long call on the stock at current levels to any dip near 150 for the target of 170 & 190 with keeping a stop loss below 140 on a closing basis.

TNPL: BUY | Target Rs 490 | Stop Loss Rs 375 | Upside 15%

After making high at 499, the stock corrected to make low of 365 but managed to bounce back from the same level which is 78.60% retracement zone from the previous low of 318.

If we observe weekly chart, the stock has again taken support at previous breakout zone of 390 and bounce sharply. On the daily chart, the stock took support at 200-100 DMA’s and rose.

Momentum indicator RSI also showing positive divergence on the daily chart.

Considering above technical setup and a strong pullback in counter, Momentum Traders can take the position at current levels to any dip near 400 for the targets of 490 stop out levels can be kept below 375 on a closing basis.

MORE WILL UPDATE SOON!!

How to ride through the stock market volatility instead of panicking

To get best returns and realise your financial goals, you must stay invested for the long-term.

The current volatile stock market may worry you about your investments. However, if your investment strategies are directed towards meeting your financial goals which are planned for a longer time horizon, you only need to focus on your investment-cum-asset allocation strategy instead of present market fluctuations.

Here are some key points to remember while investing your money in equities:

Stick towards your long-term investment goals

Timing the market and taking action is like gambling and hoping to win on every move! We all know it is impossible. Yet, when it comes to equities, everyone feels that they can predict what will happen in the markets. “I am not suggesting that one should not be cautious and track the investments made but as investors, we need to focus on long-term goals for which the investments have been made. It not only makes the achievement of goal easier, it also eases the regular stress of reacting to various domestic and global external factors that affect the equity markets in the short term. In my view, recurrent churn in the portfolio only causes lower returns over the long term and in many cases, it ends up with disturbed allocations as one is trying to time the markets to enter or exit.

Equity investments generally tend to be goal-based – be it for buying a car or home, education, retirement, etc. To get best returns to realize these goals, you must stay invested for a longer period. Systematic Investment Plans (SIPs) help you by averaging costs and reducing risks. So the longer you stay invested, the higher would be your returns. Typically, savings should continue for 5-10 years. All categories of equity schemes will deliver inflation plus returns over a 10-year period,” said Adhil Shetty, CEO – Bankbazaar.com.

Review your Asset Allocation Strategy

It is prudent that one sticks to their asset allocation at all times as correct asset allocation is made on the basis of individual risk appetite. Generally, investors get carried away when certain asset classes tend to outperform the other in the short term.

We may recall, allocation to Gold ETFs was a hit between 2011-2013 when equities were underperforming. For those who made the shift eventually not only lost staying in Gold and losing on the gain in equities. Needless to say that Gold as an asset class should be there in one's portfolio maximum upto 5% to hedge inflation and global uncertainties when investors move to gold as the safest haven. Hence, it is essential that investors review the portfolios and accordingly adjust the allocations periodically. For example, currently, most equity allocations have shot up due to the sharp rise in the markets. Ideally, one should adjust them now. Over a period of time, if markets tend to correct and exposure to equities reduce, one should accordingly increase the exposure. We recommend to review the allocation every 6 months to a year or when there is a sharp move in the invested asset class.

Gain from bearish market sentiments

Investors must consider market corrections as a great opportunity for wealth creation. Like other past corrections, this phase would also pass after presenting opportunities to buy funds at an attractive valuation.With existing equity fund investments and SIP contributions can invest 10-20% of their equity portfolio in a lump sum at every 5% correction in broader indices. However, avoid mid and small-cap funds as valuations are still on the higher side. “Frequent portfolio reviews only compound the emotions of fear and anxiety among investors, leading many to redeem investments and book losses. Instead, mutual fund investors should list down their goals and investment horizon and check whether their asset allocation needs any adjustment. Do not review your portfolio just because of some bad news.

One must actively invest for the long-term through systematic investment approach on a monthly basis where through these market corrections one can also get the rupee-cost averaging benefit too. Hence, fence-sitters who did not invest in the recent past should start investing.

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Multibagger Idea: Saurabh Mukherjea shares the recipe of bagging 10x return in 10 years

The definition of a good company is a company which has given consistent growth in revenues consistently for the last 10 years with a return of capital employed of 15 percent.

    

Making money in equity markets is not easy and investors are always in search of stocks which can give multibagger returns in near future. Finding such stocks is tough, and requires a lot of study, but there is a simple formula to spot such stocks with high return potential.

Saurabh Mukherjea of Ambit Capital in his latest book titled 'Coffee Can Investing' is all about buying quality companies and holding them for long-term. “It highlights the strategy of buying companies which are growing at a decent rate with sensible ROCs and sit tight. If investors typically do this, we get 10 times return in 10 years.

Markets are fully valued right now and our fair value of the S&P BSE Sensex is around 30,000, said Mukherjea. The economy is recovering and the stock market is overvalued and by year-end, this overvaluation will get cleansed out.

The global economy is steaming along, and it looks like across the world including India we have pre-empted the recovery by buying ahead of it, and now a correction of 15 percent could bring things to a stable footing.

In India, the cause for a fall could be LTCG while for US markets it could be a rise in bond yields.

If the index corrects further investors should not rush into buying stocks which have fallen the most. Instead, look for good companies which have given consistent growth rate in the past, quality management and good balance sheet.

The definition of a good company is one which has given consistent revenue growth for the last 10 years with a return of capital employed of 15 percent.

Unfortunately, only 17-18 companies qualify with this criteria. But, if investors systematically buy those companies they will get 10 times return in the next 10 years.

Investors can use the same mantra to select companies in the smallcap space which have given sensible growth in the past 5-6 years, clean accounting and one important thing to see if these stocks have not run-up nearly as much compared to stocks with weak accounting and shady fundamentals.

The identity of the winning stocks will change depending on the economy. In the last couple of years, the Coffee Can portfolio has companies from the building material sector. This year, 2018, we have added midcap pharma company.

The matrix we are using to select companies is 10 percent revenue growth and ROC itself are doing the job for you. It will help in filtering companies which are likely to benefit the most based on economic development.

Commenting on the Budget, Mukherjea said barring LTCG Tax, rest of the Budget 2018 was broadly in-line with expectations.

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