Nifty likely to remain volatile this week; 3 stocks which could give up to 12% return

Here is a list of top three stocks which could give up to 12% return in short term.

   

The Indian equity market continued with a winning streak on the weekly basis although it ended the last session on the lower note.

The Nifty50 index firmly managed to close above a psychological level of 10,500 last week despite the global volatility, and continued with positive momentum on its weekly price chart.

Although, the momentum was lost to bear regime during the closing week to touch 10,527 levels on the backdrop of a global and domestic factor, but it managed to recoup the loss to close at 10,564 levels with about 1 percent gain on weekly basis

The rangebound trading levels on last day formed an indecisive ‘Doji’ candlestick pattern on the daily chart but continued with bullish candlestick pattern on weekly basis indicating a sideways level trade.

The relative strength index (RSI) level on weekly chart stood at 57 indicating an upward movement from earlier level coupled with a positive cue on MACD.

Based on a Fibonacci retracement, a support for the index is placed at 10,409 levels and resistance at 10,570 levels. Going ahead, in a week with F&O expiry coupled with earnings data, the rangebound trade for index remains intact from the price action of last closing session.

However, after decisively breaching upward from 10,400 and 10,500 levels, the momentum still hold for the bullish regime on weekly basis. Therefore, continuing with the stop-loss regime we maintain a rangebound trade for the index at 10,690 on upside and 10,430 levels on the downside.

Chambal Fertilizers & Chemicals Ltd: BUY| Target Rs 226 | Stop-loss Rs 190 | Return 12%

After making a marginal consolidation across 173 levels from 186 peaks, Chambal chemical traded on a positive trajectory on its long-term price chart.

The scrip touched the upper circuit in last trading session despite remaining muted in preceding trade and witnessed a significant volume growth in the current level, indicating a sustained trend.

On the daily price chart, after closing with about 6 percent the scrip made a strong bullish candlestick pattern indicating continued momentum.

Although the scrip remained on the oversold zone with weekly RSI level at 71, the MACD continued to signal positive trend on the current level.

With price trading above major levels, the scrip has a support at 177 levels and resistance level at 233. We have a BUY recommendation for Chambal Chemical which is currently trading at Rs. 201.85

Welspun India Ltd: BUY| Target Rs 64 | Stop-loss Rs 50 | Return 10%

Welspun India witnessed a substantial momentum during last week’s session after a forming a strong base across 51 levels and formed a reversal trend on its weekly price chart.

After entering the oversold zone, it decisively pulled back near 59 levels with about 11 percent gain on an intraday basis. Further, the scrip witnessed a 10x times volume growth in last week’s trade indicating a positive cue.

The scrip formed a bullish reversal candlestick pattern on its daily price chart after forming a ‘hammer’ kind of a pattern on the previous session which signals a positive momentum.

Further, a secondary momentum indicator witnessed a revival with weekly RSI level shifting upward coupled with positive crossover on MACD in near-term.

The support level for scrip is currently placed at 45 and resistance level from the upper band at 89. We have a BUY recommendation for Welspun India which is currently trading at Rs. 58.05

Eveready Industries Ltd: SELL| Target Rs. 310 | Stop-loss Rs 350 | Return 5%

Eveready Industries continued to consolidate on its daily price movement on the backdrop of sustained selling on a higher level. Although it managed to touch 351 levels on an intraday basis but failed to sustain the level to breach below its crucial support level of 200-day EMA.

The scrip also witnessed a negative volume trend last week, and lost about 10 percent on a single day. The scrip formed a solid bearish candlestick pattern on its weekly price chart after breaching below 200-day EMA level which indicates a strong downtrend.

Further, the secondary momentum indicator continued to indicate negative signal with RSI at 38 level coupled with weak support from MACD trend.

The scrip is facing a resistance at 368 levels and support at 292 levels which will remain crucial for scrip. We have a SELL recommendation for Eveready Industries which is currently trading at Rs 328.05

MORE WILL UPDATE SOON!!

Use a sharp mkt correction to buy these 3 stocks which can give up to 100% return

Here is the list of three stocks that can give up to 100% return.

   

In the past, Sensex earnings have looked suppressed due to higher provisioning by banks, which impacted their profitability. Resolutions by the National Company Law Tribunal (NCLT) been quite encouraging as a number of cases have seen substantial interest from potential suitors. This may lead to lower-than-expected haircuts and a resultant reversal of provisions.

The recent bond yield correction and spreading of bond portfolio losses over the next four quarters will provide some cushion to banking sector earnings. A higher supply of government securities, particularly from state governments, along with a further rise in crude oil prices, is a cause for concern for markets in the near-term.

The re-rating of equity markets from this point onwards will hinge on Q4 FY18 corporate earnings. The Q3 numbers showed initial signs of corporate profitability limping back, but the next few quarter numbers shall define the market direction. Two things that should work in favour of a recovery in corporate earnings are: a) On a comparative YoY basis, they should reflect better numbers on a low base due to demonetisation and normalisation of disruptions caused by rollout of the Goods & Services Tax last fiscal; and b) Expectations of a pick-up in the reported GST numbers should have incremental flow of business to the organised sector, albeit in a gradual manner.

This should ultimately reflect in the better earnings profile of India Inc and the earnings projections of the index over the next few quarters. Our sense is that corporate earnings should compound at 13-14 percent CAGR over the next two years. That should give an impetus to forward multiples underpinning index valuations.

For 2019, equity markets could be driven by a mix of domestic and global factors. The Indian economy is likely to go through a political and structural shift in the next few months. The government may want to expand spending ahead of elections, but needs to keep its fiscal deficit and inflation expectations under control. How the government manages to balance these economic demands and the reality of politics will eventually determine how the Indian markets pan out during the year.

The result season has begun on a positive note with large companies from the information technology, cement, private banks space declaring higher than expected earnings. This week, quarterly earnings, trend in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) will dictate the trend on bourses.

Any sharp correction is a good opportunity for investors with a long-term horizon to start building a portfolio of quality stocks to ride the next phase of the larger uptrend. We recommend investors to be stock specific and consider companies with good earnings visibility at decent valuations.

Here is the list of three stocks that can give up to 100% return:-

Tejas Networks

We believe Company is a strong play on Telecom ancillary space and are very excited about its prospects. It tends to be seen as a telco player, but is a made-in-India software story in the product and technology space for the telecom industry, competing with global companies globally and in India.

Tejas Networks (TJNL) is an Optical and Data Networking products company which designs, develops and sells high performance products to Telecom Service Providers. TJNL’s revenue mix consists of Optical Networking Products which contribute ~90% to its topline whereas Services contribute ~10% to topline. As far as Geographical mix is concerned TJNL derives 67% of its revenues domestically and 33% from foreign markets with a large chunk from US and Middle East. The Company boasts of impeccable R&D discipline to ensure continuous portfolio enrichment through innovations and high domestic market share. Lack of peers and infrastructure indicate huge opportunity for the Company. Tejas Networks is the 2nd largest optical network Company of the world behind Chinese Company and is competing with giants of the world.

The company is an optical and data networking products firm with customers spread over 60 nations. It designs, develops and sells software enabled networking equipment products to telecommunications service providers, internet service providers, utility companies, defence companies and government entities. To its credit, the Company has end to end data networking portfolio with 333 patents and 250+ Silicon IPs. It may be noted, that customers in telecom industry are investing significantly in optical networking. The engineering team at Tejas Networks, was developing technologies for programmable silicon chips, so that clients' hardware could be upgraded or new features built upon it, without overhauling the equipment. They call the innovation 'software-defined hardware', where the hardware itself becomes programmable. It has helped Tejas transition products and solutions as applications moved from voice to data.

The Company is a major beneficiary of BharatNet project introduced by Government of India. The government has embarked on the BharatNet project to lay optical fibre cables. It is pumping in Rs 10,000 crore in 2017-18 under this, with fibre laid out already in 1,55,000 km. If Digital India has got to be a reality, only half of India can be connected by private telcos and on data. The government has earmarked Rs 45,000-crore for BharatNet over multiple phases.

TJNL core DNA is R&D (52 percent of total employees in R&D) at a cost efficient manner as compared to US players. Like Apple, the Company outsources capital intensive manufacturing from contract manufacturers. Operating cost is mainly manpower cost.

Tejas enjoys high entry barrier against domestic competition. India’s optical capex growth rate is 2x China. Push for Make in India and Digital India will give a push to the Company. In addition, government schemenamed “Bharatnet” of connecting 2,50,000 gram panchayats using GPON technology will give push to Company’s topline.

Its products are used to build high-speed communication networks that carry voice, data and video traffic from fixed line, mobile & broadband networks over optical fibre. They also utilize programmable software-defined hardware architecture with a common software code-base that delivers an app-like ease of development and upgrades of new features and technology standards.

The Company offers a family of architecture and sell architecture of different capacities. The product lifecycle is of 7-10 years. It has IPR created over 15 years.

The company’s management is optimistic about expansion to markets that have similar eco pattern like India viz. South East Asia, Latin America, and Africa, among others.

The Company had informed stock exchanges that it's FY18 revenue is likely to dip yoy versus 5 percent growth guidance. The Company attributed the guidance change to delays in receiving certain large orders. However, it has mentioned that the order pipeline remains healthy and the Company is set to report good PAT in FY19.

For the company, India is its biggest geographical segment in terms of revenue as 65 percent of its total revenues. The company’s clientele generated 88% of FY17 revenues from repeat business. In terms of contribution of top five customers, 58% of revenues were contributed by them in FY17.

The Company’s operating revenues and EBITDA have witnessed a CAGR of 24% and 41% respectively over the period FY13-17 to Rs 878.2 crore and Rs 174.2 crore. In FY17, there was a prudent onetime writeoff of Rs. 30 crores (wireless LTE) instead of amortization. Typically, if R&D employee cost is Rs. 100 - Rs. 70 is capitalized and amortised over 10 years while balance Rs. 30 charged as expense in Profit & Loss (same year).

We believe the benefits of Asset light business model and operating leverage have started kicking in and would be reflected in coming quarters. With steep increase in topline, the company has benefited from the operating leverage while margins have expanded from 12% in FY13 to 19.8% in FY17.

However, since most of its clients are in telecom sector where payment cycle is tough, the company has an bloated working capital cycle. The company’ net working capital ex cash stood at 235 days (debtor days of 149 days and inventory of 76 days) indicates that cash generation ability is tough despite higher profitability due to nature of industry which we consider as a headwind and can affect investor's confidence.

The high concentration of clients as one of the key risks. About 58% of its revenue (FY17) is generated from top five customers who exercise substantial negotiating leverage. The loss of one or more of significant clients could have an adverse effect on the business Meanwhile, the company will have to constantly enhance products that will address technological changes.

We believe that the company will deliver high growth in an underpenetrated industry and near monopoly status in domestic status. We expect a target of Rs. 450 by FY19 end.

Sequent Scientific

It’s an interesting story in Pharma space and can become a multibagger. We expect a major upside in this Company. Its been under pressure for a quite long time and expect a revival very soon. Once the stock gets re rated after it starts reporting good set of numbers from Q4F1Y8, we expect around 100 percent upside by FY19 end.

To give a background, Sequent Scientific Limitedheadquartered in Mumbai, India with a global footprint, operates in the domains of Animal Health (Alivira) and Analytical Services. SeQuent has seven manufacturing facilities based in India, Spain, Germany, Brazil and Turkey with approvals from global regulatory bodies including USFDA, EUGMP, WHO, TGA among others. Its API facility at Vizag is India’s first and only USFDA approved facility for veterinary APIs. The human API business of Sequent was recently demerged into Solara Active Pharma Sciences Ltd. (SAPS), with an appointed date of 1st October 2017.

Sequent Scientific Limited (SeQuent) wholly owned subsidiary Alivira Animal Health Limited (“Alivira”) through Alivira Ireland, has recently signed an agreement with simultaneous closing to acquire 100 percent of Bremer Pharma, Zydus Cadila’s Animal Health Business in Germany.

Bremer Pharma, founded in 1982 is a niche veterinary health company in Germany with focus on cattle and swine segments. Bremer has a portfolio of over 400+ registered products across Europe, Far East, MENA, Russia & Africa operating in vitamins, antibiotics and hormones. Bremer registered sales of €6.7Mn ($8.3Mn) in year ending March 31, 2018 with marginal losses. Bremer comes with a EUGMP compliant injectable manufacturing facility with approval from German Competent Authority LANUV. The site was recently re-inspected and obtained a renewed GMP certificate on 12th March 2018.

This acquisition provides Alivira’s with a beta-lactam & non-beta lactam injectables facility for EU markets, which compliments its Orals & Powders beta-lactam and non-beta lactam facility based at Barcelona in Spain. EU is Alivira’s largest market accounting to 60% of revenues.

With this acquisition, Alivira is a ~$150 Mn business on annualized basis with presence in 95+ countries. Alivira has strong presence in the formulations business in key veterinary markets of Europe, LATAM, India, Turkey, Africa and South East Asian countries. Over 80% of the revenues of Alivira are generated outside India, with manufacturing operations in Spain, Germany, Brazil, India and Turkey and R&D development in India, Turkey and Spain.

In last 36 months Alivira has successfully acquired and integrated over 8 businesses globally. These successful integrations, coupled with commercialization of API’s in US and aggressive new product development program will create sustainable value and speed up the revenue and margin growths in the coming years.

Commenting on the acquisition, Manish Gupta, Managing Director said ‘We are excited with the addition of Bremer Pharma to the Alivira fold as it consolidates our position as a leading Animal Health Company in the European market. This also provides comprehensive manufacturing footprint in EU across Injectables, Orals, Solids, and Powder range and front-end presence in Top 6 of 10 EU markets. The scale up and growth momentum will further drive the next phase of value creation through accelerated revenues and margin expansion in the business.’

Gayatri Projects

Hyderabad based GPL with over 50 years presence in infrastructure and Construction primarily undertakes Road, Power and Irrigation projects across the Country and owns almost all its equipments, enabling optimal cost control. It also has Joint Ventures (JVs) in Build-Operate-Transfer (BOT) projects and executes construction contracts in partnership with Indian and overseas Companies. Over the last couple of years, the Company has relooked at its business strategy and has made significant changes in its business model. The Company has evolved from an asset heavy business model to an asset light business model (pure play EPC business). Gayatri Projects is one of the fewer pure play EPC companies in the sector with zero exposure to HAM and small residual exposure in BOT projects.

The Company has derisked and diversified its portfolio both geographically and business wise. As a pure play EPC company, the Company’s order book largely comprises of road EPC projects, irrigation projects, land development and railways. It has a pan India presence and have projects ongoing in UP, Andhra Pradesh, Bihar, Orissa, Haryana, Northeast, Karnataka and Mumbai.

During November 2017, the Company achieved a major milestone in its value creation journey restructuring and demerger of its road BOT business. This is the final approval from NCLT. Consequently the road business will be demerged and listed as a separate entity Gayatri Highways Limited. GPL shareholders will directly own 74 percent of this entity. GPL consolidated balance sheet would be recast as of March 31, 2018 to exclude the assets and liabilities of the BOT businesses. Key impact of this is that the GPL consolidated debt would reduce by more than Rs.25 billion. All of its assets on BOT portfolio are successfully commissioned and toll and annuity collections have started. In addition to distributing the assets to shareholders and separately listing as announced earlier, the Company continues to look for ways to monetize this portfolio.

GPL is financially strong EPC player with high revenue visibility. There is a strong momentum of order inflow. The order book of the company is robust and stands at Rs. 120bn, which is 5.6x of its FY2017 revenues which provides strong revenue visibility.

The Company has recently won orders worth Rs. 28 bn from NHAI which is a testament of the Company’s project execution capabilities and prudent bidding strategy. The Company has one of the largest market share of NHAI awarded projects. The Compnay has bid pipeline of Rs. 75.49 bn for next 2 months.

The Management efforts are now very much directed towards efficiently executing these projects and the Company is confident of delivering 30% revenue growth in its construction business over next 3-4 years.

At CMP of Rs. 200, the stock is valued at a P/BV (x) of 3.9x on FY17Book Value. On anualized FY18 numbers, the stock trades at a P/BV of 3.3x. With due consideration to factors like a) strong presence in high growth construction sector, b) healthy and diversified order inflows with good revenue growth visibility, c) pan India operations spread across 15 states, d) strong in-house designing and engineering capabilities complemented by state of art fleet of construction equipment, e) highly efficient operations with strong execution capabilities - completed more than 6,500 lane km of road construction over the last 25 years, f) one of the largest market share of NHAI awarded projects, g) track-record of completing ~40 projects aggregating to Rs 90 billion+ value in last 5 years, h) strong financial position with significantly improving balance sheet, j) transformed its business from asset heavy to asset light business model – pure play EPC company with strong return profile, k) significant value unlocking through business restructuring, we recommend investors to “BUY” with a target of Rs. 279 (3.9x at estimated FY19 Book Value) for investors with a horizon of 9-12 months.

MORE WILL UPDATE SOON!!

4 strong quality contrarian buys post the recent correction

The escalating load of NPAs, bond yields and decline in credit growth rate are major issues faced by state run banks.

   

Crude is currently trading at a four-year price high of above USD 71 a barrel, which may trigger a rise in inflation. But given the election period, oil marketing companies (OMCs) may have to absorb the hike in cost, impacting their profitability.

March CPI inflation has eased to 4.28 percent from 4.4 percent in February due to reduction in food prices. However, any further rise in oil prices and monsoon outlook will adversely impact its trajectory.

The recent spike in crude oil prices is largely due to a sudden spurt in West Asian geopolitical tensions. A spike in oil prices above current levels can attract higher US supplies (shale oil). Considering this, oil prices are likely to be in the USD 60-70 a barrel range in the medium-term.

Average monthly inflows in mutual funds was Rs 20,000 crore till February. This has reduced to Rs 11,000 crore in March due to negative equity returns since February in global and domestic markets.

Additionally, introduction of long-term capital gains (LTCG) from April, led to marginal redemption in the last two months of FY18. There is a possibility that this reduction in inflows can be sustained in the medium-term due to higher volatility in the global and domestic markets.

The trend is likely to be positive as financialisation of assets will be key to household holding in India for a long time.

The pharma sector could emerge as a dark horse in FY19. The sector has been facing adverse conditions in both the domestic and global markets since 2016. All major Indian pharma giants were impacted due to stricter norms of the US Food and Drugs Association (USFDA) leading to subdued earnings and underperformance by the sector.

During the last couple of months, we have slowly shifted our view on the pharma sector from neutral to constructive. Their valuations are so attractive that it is impossible to avoid such businesses for the long-term as these are likely to stabilise over the next one to two years. It is especially true for companies which have shown positive regulatory approvals from the USFDA.

Avenue Supermarts (D’Mart):

D’Mart has a strong track record of high growth and profitability. Revenue/PAT has grown at 37/51 percent in the past five years. EBITDA margin is higher among peers due to better asset turnover and lean cost structure. The recent strategy revamp to include leased stores along with owned ones will accelerate its pace of growth. We expect high growth to continue aided by store additions, change in strategy, e-commerce, debt reduction and tailwinds from the Goods & Services Tax (GST). As a result, we expect the high premium to be maintained in the medium-term.

Bharat Electronics (BEL):

At present, BEL’s valuation looks attractive post the recent 20% correction in the last two months due to lower-than-expected allocation to defence from the Union Budget and stake dilution by the government. However, we continue to maintain our positive view on the stock given the strong order backlog of Rs 40,000 crore (5x FY17 sales) which provides a strong earnings outlook. Further, BEL has limited competition due to its niche capabilities, strong technological tie-ups, strategic nature of projects, capital-intensive nature and high gestation period. Going forward, BEL will emerge as a key beneficiary from the on-going defence modernisation programmes and the government’s focus on indigenisation.

Natco Pharma:

Natco Pharma is a vertically integrated pharmaceutical company with a presence across multiple speciality therapeutic segments. Focus on R&D and complex molecules will drive growth and stability in the business. The company is strategically placed in terms of backward integration for critical active pharmaceutical ingredients (APIs), which equips it to enjoy corresponding gains in terms of cost, quality, and logistics. EBITDA margin is expected to remain stable at 40% over FY18-20e, led by new launches in the US and India and improvement in operational efficiencies.

Tata Consultancy Services (TCS):

We remain positive that TCS will deliver better earnings growth under its new leadership. Despite external headwinds, revenue from its digital business stood at 22.1 percent in Q4 FY18, a growth of 40 percent YoY. The management is confident that one-third revenue will accrue from the new digital business by FY20. We are factoring in 7 percent revenue CAGR over FY17-20e given the strong deal pipeline in the non-BFSI sector, coupled with traction in the digital business and recovery in the retail vertical. At present, TCS is trading at a valuation of 19x FY20 P/E, which is acceptable considering its three-year historical average.

MORE WILL UPDATE SOON!!

Akshaya Tritiya 2018: There are golden opportunities beyond just gold, say experts

A look at data for gold funds between Akshaya Tritiya in 2017 (April 28) and April 16 this year, reveals that returns have been in single digits.

  

Investors are always on the prowl for golden opportunities to make money. And what better occasion to turn a new leaf than the auspicious occasion of Akshaya Tritiya.

The Hindu festival, seen as an opportune day to accumulate or begin buying different assets for prosperity, sees many potential investors flocking to buy gold or gold-related assets every year.

In fact, the spillover is seen in equity markets as well, where gold and jewellery stocks tend to gain a day before the festival. On Tuesday, stocks such as Goenka Diamond, PC Jeweller, Titan Company, Renaissance Jewellery, Tara Jewels and TBZ gained up to 9 percent.

Other such asset classes where investors park their money are gold funds and gold ETFs (exchange traded funds). But a look at data for gold funds between Akshaya Tritiya in 2017 (April 28) and April 16 this year, reveals that returns have been in single digits.

According to data from Morningstar, in the ETF category, the maximum returns came in from IDBI Gold ETF at 6.42 percent, while the lowest return was 4.98 percent by ICICI Prudential Gold Fund ETF.

  

  

In fact, the average returns, or even the highest returns in both the categories, have either managed to just match or largely underperform returns from traditional defensive asset classes such as bank deposits. These are usually in the 6-7 percent range.

Experts highlight that even investors with risk-averse behaviour must ideally look away from such asset classes.

Most of the asset classes, be it gold, real estate or debt, do not offer meaningful returns. It will be advisable for retail investors to have a fairly large exposure to equities. Such investors could also look at hybrid funds, which invest in debt and in turn see lower volatility.

Speaking about the returns chart, Dua highlighted that the longer-term performance of gold funds have actually been negative.

Financial planners also advice investing in the appropriate investment avenue rather than in such funds.

This festival brings in the traditional habit of buying gold for auspicious purposes. But it cannot be considered to be an investing habit. Gold has not performed for the past five years and the even longer term returns show around 6-7 percent growth in rupee terms. So, one must look at asset classes which will give you good returns. At best, you can still have 5-10 percent of this class in your portfolio if you are a conservative investor and seeks some kind of a hedge, without worrying too much abou returns.

Sadagopan went as far as to say that one must buy the yellow metal only when there is need for it.

Gold should be used as an avenue only if there is end-use to it. For instance, if gold is being saved with the purpose of, say, your kid’s marriage, which is two-three years away, that makes sense. But to do that 10-15 years in advance is a flawed logic.

MORE WILL UPDATE SOON!!

Nifty likely to hit 10,600 by April expiry; top 3 stocks which could give up to 15% return

Here is a list of top three stocks which could give up to 15% return in the short term.

  

The Nifty is trading above the crucial level of 10,500, and hereon the derivative data reflects that there are a lot of outstanding short position in Nifty as well as in Index calls. It looks like, we could expect another round of short covering in the expiry week.

As per current derivative data, Nifty can move towards 10,600-10,650 mark this week as the market undertone remains bullish with the support of consistent short covering.

Derivative data indicates bullish scenario to continue with Nifty having multiple supports at lower levels around 10,500 & 10,400 spot.

Option writers were seen active in the recent rally. Put writing in 10,400 and 10,500 strikes along with the unwinding in calls will lend support.

We have been continuously seeing open interest addition post expiry which indicates long buildup. On the technical front, 10,475-10,500 spot levels is a strong support zone and the current trend is likely to continue towards 10,600-10,650.

Here is a list of top three stocks which could give up to 15% return in the short term:

NOCIL Limited: BUY| Target Rs 260| Stop Loss Rs 205| Return 15%

After testing 236 levels in early 2018, the stock witnessed profit booking at higher levels and retraced back towards its 100-days exponential moving average (DEMA) on the daily charts.

Since then, consolidation in the prices kept the stock in a thin range of 185-210 along with consistent buying at lower levels.

This week once again fresh breakout in the price has been observed above 220 levels along with hefty volumes. Additionally, the stock is also trading in a rising channel and forming higher highs and higher lows pattern on daily charts.

Traders can accumulate the stock in a range of 225-230 levels for the target of 260 and a stop loss below 205.

NRB Bearing Limited: BUY| Target Rs 188| Stop Loss Rs 154| Return 13%

The stock has been consolidating in the range of 150-165 for more than eight weeks and this week it gave a breakout above the key resistance levels accompanied with larger volumes.

Additionally, the stock has also formed rounding bottom formation on weekly interval along with positive divergence on stochastic and RSI indicators.

The fresh breakout in price can trigger follow up buying the stock moving forward. So, traders can accumulate the stock in a range of 166-170 for the upside target of 188 and a stop loss below 154.

Supreme Industries Limited: BUY| Target Rs 1450| Stop Loss Rs 1180| Return 13%

After declining from 1450 levels in early 2018 stock took support at its 200 days exponential moving average on a daily interval which is placed at 1160 levels.

Since then the stock went into consolidation phase and has been seen trading in the range of 1160-1250 for more than eight weeks. Now, last week once again fresh breakout in prices has taken stock above its key resistance level of 1250.

Additionally, the stock has also given breakout above the bullish flag formation pattern on a daily interval. Traders can accumulate the stock in a range of 1280-1300 levels for the upside target of 1450 and a stop loss below 1180.

MORE WILL UPDATE SOON!!

10,700 will act as resistance in April expiry; 5 stocks which could give up to 14% return

The immediate support is seen around 10,451 (100DMA) and 10,400 levels. According to daily Pivot charts, the key support level is placed at 10,509, followed by 10,470. If the index starts moving upwards, key resistance levels to watch out for are 10,574 and 10,600.

  

The NSE equity benchmark Nifty50 continued its positive momentum and ended in green for the ninth consecutive trading session. The index continued to trade above 10,500, took some support on the back of forecast of normal monsoon for the year 2018-19, which will be a positive boost for the rural economy.

On Tuesday, after a gap-up opening, markets largely remained range-bound for the most part of the day, but managed to close with a modest gain of 0.19 percent at 10,548.70; forming a 'Hanging Man' kind of pattern on the daily scale on Tuesday.

If the Nifty50 manages to hold and sustain above 10,561-mark (50 percent retracement of January to March downfall) in the next few trading sessions, it can move higher till the resistance levels of 10,632 and then till 10,705 levels (61.8 percent retracement of January to March correction).

The immediate support is seen around 10,451 (100DMA) and 10,400 levels. According to daily Pivot charts, the key support level is placed at 10,509, followed by 10,470. If the index starts moving upwards, key resistance levels to watch out for are 10,574 and 10,600.

The Relative Strength Index – RSI on the Daily Chart is at 62.61; showing an upward momentum and MACD just entering above the zero line with positive crossover, which indicates that the bias could remain bullish for the next few trading sessions.

On the Options front, maximum Call open interest of 46.74 lakh contracts is seen at strike price 10,700, followed by 10,500 which now holds 39.40 lakh contracts and maximum Put open interest of 53.42 lakh contracts is seen at strike price 10,400, followed by 10,300 which now holds 49.80 lakh contracts.

As per the options data, immediate support is placed around 10,400 levels, whereas 10,700 will act as a stiff resistance in April expiry.

The India VIX ends down by 1.53 percent at 14.04 and is now trading around the crucial levels of 14. This cooling down of VIX indicates a positive signal for nifty to inch upwards in upcoming trading sessions.

Here is a list of top 5 trading ideas which can give up to 14% return in the short term:

NOCIL Ltd: BUY | Close: Rs 226.50 | Target: Rs 259 | Stop loss: Rs 209 | Return: 14.35%

On the weekly chart, the stock has given a breakout of its upper band of Symmetrical Triangle formation with higher volumes. The weekly Relative strength index (RSI) is showing an upward momentum and MACD is continuously trading above zero line with positive crossover whereas +DI is continuously trading above –DI.

Based on the above-mentioned observations positional traders can buy the stock in the range of Rs 224-227 with a stop loss below Rs 209 (closing) for the target of Rs 259.

Tata Global Beverage: BUY | Close: Rs 280.95 | Target: Rs 320 | Stop loss: Rs 259 | Return: 13.90%

The stock has given a consolidation breakout above Rs 279-280 levels on the daily scale with moderate volumes.

The Daily Relative Strength Index (RSI) is showing an upward momentum and the MACD is trading with positive crossover whereas +DI is continuously trading above –DI, which indicates that the stock has the potential to move higher from current level.

Traders can buy the stock in the range of Rs 278-281 with a stop loss below Rs 259 (closing) for the target of Rs 320.

Bajaj Auto Ltd: BUY | Close: Rs 2864.20 | Target: Rs 3030 | Stop loss: Rs 2770 | Return: 5.79%

The stock has given a consolidation breakout above Rs 2827-2830 level on the daily scale with higher volumes. The Daily Relative Strength Index (RSI) is making a higher bottom and higher top. MACD is trading with a positive crossover below the zero line and stochastic indicator gives positive divergence.

Based on these observations, positional traders can buy around current level and add on dips around Rs 2845-2850 with a stop loss below Rs 2770 (closing) for a target of Rs 3030.

Asian Paints Ltd: BUY | Close: Rs 1176 | Target: Rs 1236 | Stop loss: Rs 1138 | Return: 5.1%

In weekly scale, the stock has given a breakout from descending channel pattern above Rs 1169-1170 levels on Monday.

The Weekly Relative strength index (RSI) is showing an upward momentum and MACD is trading with a positive crossover but still sustaining below zero line whereas +DI continuously is trading above –DI.

Traders can buy the stock in the range of Rs 1270-1276 with a stop loss below Rs 1138 (closing) for a target of Rs 1236.

Divi's Laboratories Ltd: BUY | Close: 1180.55 | Target: Rs 1260 | Stop loss: Rs 1130 | Return: 6.73%

The stock has given a breakout from ascending triangle pattern above Rs 1142-1143 levels on Monday with moderate volumes in the weekly scale.

The Weekly Relative strength index (RSI) and OBV — On Balance Volume, are showing an upward momentum and the MACD is continuously trading above zero line with a positive crossover which indicates that the stock has the potential to move higher.

Traders can buy around current level, accumulate on dips around Rs 1160-1165 with a stop loss below Rs 1130 (closing) for the target of Rs 1260.

MORE WILL UPDATE SOON!!

Don't miss out! Top 10 growth stocks which are available at reasonable valuations

Equity investors are always on a look out of stocks which offers growth and at the same time available at reasonable valuations which makes them attractive ‘buy on dips’ stock.

   

Morgan Stanley in its report released earlier in the month of April handpicked over 10 stocks which are available at reasonable valuations. For computing these stocks, the global investment bank filtered stocks using parameters such as beta, future growth rate, and Return on capital employed.

Most of the stocks such as Asian Paints, Cadila Healthcare, BPCL, Havells India etc. have a beta less than 1 which in other words mean that these stocks are less volatile and will not fall/rise with the same magnitude compared to market movement.

Low beta stocks indicates less volatility in price movement and simultaneously, and if the ROCE is rising investor can be pretty sure that the money invested in the company is being used efficiently, leading to higher profits.

However, these may not be the only indicators of the company's prospects. The growth of the industry the company operates in and investment in productive capacities also merit close scrutiny.

Besides ROCE and Beta, investors should look price-to-book value (P/BV) ratio, debt-to-equity ratio and price/earnings growth ratio to name a few. The P/BV ratio values shares of companies with large tangible assets on their balance sheets.

Apart from these ration investors could also look at a debt-to-equity ratio which shows how much debt the company has on its books.

The PEG ratio which is price earnings to growth will help investors to know the relationship between the price of a stock, earnings per share (EPS) and the company's growth, suggest experts.

We have collated a list of top 10 high growth stocks which are available at reasonable valuations .

 

Cadila Healthcare Limited

The management expects that the fourth quarter would see around 10-12 new product launches in the US and this would continue for the upcoming quarters. The company expects, the share of US to rise in overall revenue - from a roughly 50 percent now to 55 percent in FY19 and the US would contribute around 60 percent of its revenues by FY20.

The management expects that US business to witness price erosion in the range 10-12 percent in FY2018E and 8-10 percent in FY2019E. It has guided for overall US revenue (reported) growth in FY19E, despite high base due to gLialda sales in 180?days exclusivity in FY2018E.

The company has planned a capex of Rs 1000 crore for FY2019. Research & Development (R&D) expenses will remain in the range of 7-8 percent of sales over next two years.

Havells India Limited:

The company has been continuously growing in each business parameter and it is expected that it would be directly benefitted by the Government initiatives such as “Housing and power for all”.

It is best placed to attain scale across businesses with its new SBU (Strategic Business Unit) structure and focused product-wise branding strategy.

It has pioneered the concept of the exclusive brand showroom in the electrical industry with ‘Havells Galaxy’. It became the first FMEG Company to offer doorstep service via its initiative ‘Havells Connect’.

Indraprastha Gas limited:

The company expects its sales volume to industrial and commercial clients rise 20 percent in 2018-19, after experiencing a similar gain last fiscal year, following a ban on using polluting pet coke and fuel oil in the National Capital Region on rising green concerns.

It plans to use the restrictions on polluting fuel as an opportunity to add as many as 2,000 industrial and commercial customers in 2018-19 to its current base of 3,000. It is also planning to rapidly expand sales of compressed natural gas (CNG), used by cars and buses.

To tide over the scarcity of land in cities for setting up fuel stations, IGL has begun appointing dealers to set up CNG stations – so far the company owned and operated all its filling stations.

For its expansion, IGL is focusing on congested colonies, which had escaped attention earlier but are now being targeted with enhanced security features.

Mindtree Limited:

The Company’s overall strategy of achieving industry-leading growth through deep domain expertise in chosen verticals combined with technical depth, customized for clients remain the same.

An enviable client list and a fantastic leadership team are two clear advantage areas for Mindtree and plan to leverage them to engineer meaningful technology solutions to help businesses and societies flourish.

The company has positioned itself as a comprehensive solutions provider. As per management of the company it has the capability to create opportunities to cross-sell its R&D engineering services to its clients and also supplement its IT services capabilities.

Petronet LNG Limited:

As there is a shortage of natural gas supply, the company will get the benefit as the primary play on increasing usage of LNG. In the long term, we expect volumes to remain strong and contribute significantly going forward.

Dahej capacity expansion from 15.0 million tonne (mt) to 17.5 mt is expected by June 2019. The project is 70 percent complete. In addition to the on-going capex, the company has also decided to add one more tank at a cost of Rs 600 crore.

This would increase the operational flexibility for PLNG and allow it to operate the terminal at full capacity. Management expects FY19 capex at Rs 400 crore, mostly on Dahej expansion and some initial capex on new storage tanks at Dahej.

Zee Entertainment Enterprises Limited:

The company has entered into newer geographies both domestically and globally, launched multiple channels, strengthened distribution, expanded the genres and widened its audience profile.

Moreover, the management focuses towards expansion and it is expected that market share would give strong growth to the company in coming years. Going forward, better content performance, increasing regional market share, tight cost control at the sales and distribution levels, a turnaround of the loss-making Zee Tamil, & TV and music businesses in FY19 may lead to superior margins.

JSW Steel Ltd:

Goldman Sachs maintains a buy call on JSW Steel and raised its target price to Rs342 from Rs 315 earlier. The medium-term fundamentals remain resilient, and the tariff barriers can impact steel margins.

ITC:

Credit Suisse maintains a neutral rating on ITC with a target price of Rs 320. The budget is still relevant post-GST for ITC and the risk-reward favourable at the margin. The valuations for ITC attractive relative compared to its peers.

Infosys:

CLSA maintains buy on Infosys with a target price of Rs1340. The IT major reported results which were largely inline with revenues but ahead on margins. The FY19 revenue guidance is solid at 7-9 percent YoY in USD (6-8 percent in CC).

The guidance suggests growth acceleration and stable client relationships. Infosys should get back to catching up with peer growth rates soon. The stock offers the highest potential for a rerating in the sector.

Titan Company Ltd:

Titan’s stock has delivered immense value to investors over the last several years, and its ability to compound earnings at 23 percent p.a. over the past 10 years has been a key enabler in this regard, JM Financial said in a note.

“We believe that 20 percent revenue CAGR over FY18-23E should also support margin expansion that should ideally lead to an even higher rate of growth in profit over the same period (operating leverage), which would help sustain the stock’s premium valuation, in our view.

Titan just announced an ‘extension’ of its target 20 percent-CAGR phase in its Jewellery business (2.5x increase in size in 5 years) to FY18-23E. It is important to note that the company has not delayed the time by which its Jewellery business will grow 2.5x vs FY17 level. Titan aims to compound jewellery revenue by 20 percent p.a. in the next five years as well, on FY18’s base.

MORE WILL UPDATE SOON!!