Global brokerages see limited upside for Indian market. Here are 10 strong buys for 1-2 years

Goldman Sachs, which was strategically overweight on India since March 2014, has turned slightly cautious towards Indian market in 2018 and lowered its investment view to marketweight from overweight earlier.

  

While bulls were in full control until last month, September is turning out to be a lackluster month. The Nifty50, which touched a record high last month, saw sharp selling pressure in this month taking the index below 11,300.

Escalating trade war fears, sharp drop in the Indian rupee, growing concerns of rising current account deficit due to jump in crude oil prices, selling by foreign institutional investors and risk of rate hike by central bankers are some of the factors that weighed on Indian markets.

Global investment banks such as Goldman Sachs and Morgan Stanley, which have come out with their reports on Indian market, suggest that premium valuation could be a concern and the upside from current levels remains fairly limited.

Global investment firm Morgan Stanley has raised its 30-share BSE Sensex target to 42,000 for September 2019 implying a potential upside of 11 percent, on the other hand, Goldman Sachs maintains a target of 12,000 on Nifty which translates into an upside of little over 5 percent.

Goldman Sachs, which was strategically overweight on India since March 2014, has turned slightly cautious towards Indian market in 2018 and lowered its investment view to marketweight from overweight earlier.

Sectorally, the global investment bank has upgraded defensive stocks and exporters. It is overweight on banks, tech and metals. The key downside risks remain a less stable government.

Morgan Stanley, on the other hand, said Indian equities continued to be in an uptrend and investors should bet on favourite underperformers.

"Investors should choose price underperformers with improving earnings outlook and finally broaden their portfolios by adding small and midcaps," it said.

On its Focus List, Morgan Stanley added SBI, Prestige Estates and Apollo Hospitals, and removed Infosys, Havells India and Zee Entertainment, given the recent downgrades.

We have collated a list of top 10 fundamentally strong stocks from various experts which investors can look at buying with a minimum holding period of 1-2 years:

Dr Reddy’s Laboratories:

The company has reported robust first quarter FY19 results, aided by the launch of gSuboxone. According to the management of the company, it has focus on operational efficiencies which helped in significantly improving its margin profile.

In FY19, its priorities are driving productivity improvement, focusing on core therapeutic areas and big brands, and scaling up New Chemical Entity (NCE) launches done through the Amgen deal.

In the medium to long term, management of the company wants to focus on ramping up biosimilars through internal and partnered assets and building differentiated products in relevant therapies accompanied by further ramping up of the base business.

The management expects 15-20 launches in FY19 and also expects emerging markets to grow 16% YoY led by a robust spurt in Russia and ROW.

Zee Entertainment Enterprises:

The company has led the industry in its evolution and transformation. Along the way, it has entered newer geographies, both domestically and globally, launched multiple channels, strengthened distribution, expanded the genres and widened its audience profile.

Moreover, management focus towards expansion and market share would give strong growth to the company in coming years. During the quarter, its consolidated advertising revenue grew by 18.6% to Rs 1,146 crore.

Domestic advertising revenue growth at 22.3% continued to be strong driven by demand across categories and partly aided by lower growth in the base quarter.

Bajaj Auto:

The company has a diversified business model and has a strong focus on the profitable growth, widening reach in export markets and strategic alliances with global majors.

The domestic 2-wheeler market would start growing from the festive season & would continue to grow for next couple of years. The management has assured that the company would see a very healthy top line growth and a very healthy EBITDA increase in coming quarters.

FY18-19 capex plan stands around Rs 250-300 crore. It would look to expand and strengthen the 150cc Pulsar segment in addition to pursuing new three-wheeler markets within India.

Its total current capacity is approximately about 6.6 million. 3-wheelers will be approximately about 7.2 lakh. The company expects 1.9 million export numbers for FY 19.

UPL:

The company has strong fundamentals and a robust outlook. Its strong focus on brand building and customer reach is helping the company in increasing its market share in major addressable markets.

Moreover, with the acquisition with Arysta LifeScience, the company will be one of the world's largest global crop protection companies, with an innovative and differentiated product portfolio.

The management has been focussing on technological enhancement and new product developments which would aid the further financial growth of the company. Moreover, the company believes new launches would bear fruit in the coming term.

Indian Hotels Company:

The Company plans to continue to grow through a judicious mixture of owned and leased hotels, a de-risked model along with its ability to attract management contracts.

Its command and long & successful track record in operating hotels for third party owners would facilitate growth for the future.

Moreover, it has the ability to deliver improved returns on capital would be driven through product renovation, rigorous asset management, revenue maximization, cost control and reduced leverage and exit from non-core underperforming assets.

It has assigned a capex of Rs 3,000 crore for the next five years and hotel industry occupancy levels and average room rate (ARR) are showing upward trends due to a demand-supply gap.

Mahanagar Gas:

Monopolistic nature of the business and ramp-up/expansion in new geographies would drive volume growth in the coming years. Better economics of CNG/PNG versus liquid fuels in an era of a buoyant crude price regime and maintained spreads are tailwinds for the company.

Axis Bank:

Axis Bank has made significant investments to ride the next growth cycle (post-near-term asset quality challenges), with strong capitalisation and an expanding liability franchise.

The worst seems to have been priced in, and the bank is available at attractive valuations as compared to other similarly-placed peers. The new CEO could bring in a fresh perspective to the bank’s growth plans.

Rico Auto:

Post its split with FCC in 2015 Rico Auto has changed its strategy and now caters to PV and CV markets in addition to 2W. Strong order book of Rs 4800cr, capacity expansion and increasing volumes in alloy wheels, changing product mix are expected to improve the OPM.

Rico is in the process of launching 3 more products and improving profitability may help it get re-rated to a PE comparable with other auto-ancillary companies.

Engineers India:

EIL is likely to benefit from the expected capex in the hydrocarbon and petrochemicals industry as it is a market leader for consultancy. It’s a debt-free company with an order backlog of Rs 7229cr (~3.5x book-to-bill). With a healthy cash balance of Rs 2500cr, it may reward shareholders through another buyback or special dividend.

Sun Pharma:

Sun Pharma is amongst the few companies in India to have made large upfront investments in US specialty. OPM are expected to improve on the back of key drugs launch and moderating price erosion in the US.

The company has 422 approved products in USA and 139 pending for approval. Ramp up of generics and specialty business driven by increased investments augurs well for the company as it improves the launch visibility.

MORE WILL UPDATE SOON!!

Macquarie raises Nifty 1-year target to 12,000, says macro risks higher but not alarming

Macquarie feels the valuation risk is limited to benchmark indices while midcap is still vulnerable.

 

Macquarie India believes cyclical recovery is clearly getting broad-based with infra having turned around and real estate is at the inflection point.

The global brokerage house said the macro risks have increased but are not alarming yet.

The Indian rupee depreciated 14 percent this year to hit record low of 72.97 a dollar and crude oil prices jumped nearly 19 percent to $79 a barrel which both hit trade deficit of the country. In addition, escalated US-China trade tensions added fuel to the fire but improving fundamentals is the only positive and enough to support market.

The Nifty50 gained more than 8 percent and the Sensex rallied nearly 11 percent year-to-date while BSE Midcap and Smallcap indices fell 10 percent and 15 percent respectively.

Macquarie feels the valuation risk is limited to benchmark indices while midcap is still vulnerable.

It holds a Neutral stance on banks & metals while it has positive view on cement, real estate, industrials, IT & autos.

The research house raised 1-year Nifty target to 12,000 based on 16.6x FY20 estimated earnings.

MORE WILL UPDATE SOON!!

Stock Ideas

Pharma stocks continued their recovery in the September series after consolidation was seen in the last couple of months. The first round of recovery was seen in May and June when the broader market was under pressure. The Pharma Index gained almost 18% from May lows. We believe a fresh uptrend may be seen in the pharma space where stocks like Cipla are likely to pick up momentum.

Action: Buy, Target Price:  780, Time Frame: 3 Months MORE WILL UPDATE SOON!!

Market Outlook

  

Previous Week

Equity benchmarks extended losing streak for second week in a row despite sharp recovery in second half to settle lower by 0.7% during previous week as concerns over depreciating rupee and global trade war weighed on sentiments. Nifty started the week on a weak note and dragged lower in the first two sessions of the week to form a weekly low of 11393 levels. The index however recovered in the last two sessions to close the week off the low at 11515 levels. Broader markets underperformed benchmarks during the week as Nifty Mid cap and small cap indices declined by 0.9% and 1.7% respectively.
	The S&P BSE Sensex closed at 38090, down by 299 points or 0.8% while the NSE Nifty closed at 11515, down by 74 points or 0.7% for the week.
	Among the Nifty Constituents, Eicher Motors, NTPC, UPL and Powergrid were the top gainers
	Whereas Bajaj Finance, Hero Motocorp, Coal India, M&M, Reliance industries and Tata Motors were the major draggers on the index
	Indian benchmark indices came under pressure earlier in the week amid concerns on the depreciating rupee vis-à-vis the dollar
	However, markets staged a smart recovery and managed to close marginally lower for the week post reports that the Prime Minister would hold a meeting to discuss economic scenario and the volatile rupee situation over the weekend
	On the data front, IIP for July 2018 rose 6.6% YoY largely driven by the manufacturing sector, compared to an increase of 1% in July 2017, mainly due to GST related hiccups
	CPI inflation for August came in at 3.69% YoY, lower inflation in food & beverages of 0.85% helped pull down the headline reading
	On the news front, the government approved over 25% hike in the price of ethanol produced directly from sugarcane juice for blending in petrol in a bid to cut surplus sugar production and reduce oil imports
	The Oil Minister has announced discounts on royalties and cess for production of oil & gas from enhanced oil recovery (EOR) programmes
	The move is to incentivise the upstream oil & gas sector to unlock more resources and increase the country's production in the long term.
	Crude prices closed higher at about US$ 78.4/barrel as compared to previous week's close of US$ 76.4/barrel
	Gold prices also closed higher at $1210 /ounce as compared to last week's closing price of $1206 /ounce
	Bond yields increased to 8.09% from previous week's close of 8.01%. Week Ahead The price action for the week formed a Bullish Hammer like candle with a significant lower shadow indicating buying demand around earmarked support of 11200 levels. Index made a sharp recovery of 273 points from intra week low of 11250, thus, making current week's pull back larger in magnitude than prior week's pullback (210 points), indicating strengthening price structure. In coming week, we expect the Nifty to extend its pull back towards higher band of consolidation (11600-11200) placed at 11600 levels. Our strategy of buying on declines towards support around 11200 worked in last week as price action highlighted continued buying demand at lower levels We reiterate our stance of accumulating quality stocks as index undergoes a healthy round of consolidation and forms higher base around 11200 levels over coming weeks Structurally, index has entered a corrective phase after eight weeks of rally measuring +11%. We believe the Nifty would hold its strong support in the range of 11200-11250 as it is:   50% retracement of eight weeks up move (10807-11760) at 11283 The monthly low of August 2018 placed at 11235 lower band of the rising channel containing the entire price activity since June 2018 is also placed around 11185 levels and January 2018 peak at 11171 which is likely to reverse its role as support now The Nifty midcap index retraced 50% of last seven weeks' (13%) rally and seen forming higher base We believe the broader structure remains intact as the recent pullback off July 2018 low 17700 (of 2388 points) is larger in magnitude than previous pullback in March-May 2018 (2027 points) Hence, the index is likely to enter into a consolidation phase that would help Nifty midcap to form a higher base while focus remains stock specific Hence, one should focus on accumulating quality stocks in a staggered manner Important data releases in next week:   US: Markit US Manufacturing PMI (Sep), Markit US Services PMI (Sep) Eurozone: CPI YoY (Aug), Markit Eurozone Manufacturing PMI (Sep) UK: CPI YoY (Aug) Japan: BOJ Policy Balance Rate (19 Sep), Natl CPI YoY (Aug), Nikkei Japan PMI Mfg (Sep) MORE WILL UPDATE SOON!!

Market Strategy

Market Strategy

  

NIFTY

Nifty is likely to consolidate around 11400 levels in the coming week. The highest Put base has remained at 11400 strike for major part of this series and the index is expected to remain around these levels for sometime. Nifty range for the coming week is expected to be 11350-11550. The volatility is still hovering near the key resistance of 14%. The moment it starts moving lower, it would be positive for the market. Nifty Futures open interest has come down from 30 million shares to 28 million shares since the last series on account of closure of long positions. In addition, certain outperforming segments in the market like FMCG has also seen long liquidation. If Nifty starts forming a base above 11000 levels, slowly the money will start flowing into such spaces.

The Nifty is likely to consolidate around 11400 in the coming week. The highest Put base has remained at the 11400 strike for a major part of this series. The index is expected to remain around these levels for some time. The Nifty range for the coming week is expected to be 11350-11550

 • Volatility is still hovering near the key resistance of 14%. The moment it starts moving lower, it would be positive for the market • Nifty futures open interest has come down from 30 million shares to 28 million shares since the last series on account of closure of long positions. In addition, certain outperforming segments in the market like FMCG have also seen long liquidation. If the Nifty starts forming a base above 11000, slowly the money will start flowing into such spaces

 • The pharma space, which was a late mover, can still participate in the up move. Some pharma stocks are exhibiting good short covering patterns. In addition, the market is expected to become more stock specific. Certain stocks that were under performing so far can start witnessing pullbacks 

Bank Nifty: Index likely to consolidate with positive bias.

Volatility in the currency market remained extremely high throughout the week. As US$INR appreciated from level of 73, a reversal was also seen in the Bank Nifty from 26700. The index rallied nearly 500 points from the lows with stocks like Kotak Mahindra Bank, HDFC Bank and Axis Bank providing cushion. Participation was also seen in midcap stocks like IndusInd Bank.

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 • Despite the index falling nearly 1000 points from the highs, no major addition was seen in open interest. However, as the index reversed from 26600, marginal addition was seen in OI with a rise in price indicating buying interest is coming at lower levels. The current leg of covering can be on the back of fresh long additions

 • As the index moved above 27000, Call blocks were seen in 27200 strike followed by 27500 Call. The index has been consolidating near 27200. We feel a close above these levels is likely to take the index towards its sizable Call base of 27500. However, in case of a correction, Put writers of 26900 are likely to provide a cushion.

 • The current price ratio of Bank Nifty/Nifty remained near 2.37 levels. Multiple support was seen near 2.36 levels. Hence, we feel a reversal can be seen in select banking stocks, which are likely to provide the required push to the index in the coming days.

MORE WILL UPDATE SOON!!

Market Week Ahead: Rupee, trade war likely to weigh on markets; oil and macro data to be in focus

Here are top 10 factors that will keep traders busy next week.

  

The market took a breather as bears managed to get full control at Dalal Street for the first time in last seven consecutive weeks, thanks to a sharp weakness in rupee owing to dollar demand and higher crude oil prices.

The 50-share NSE Nifty corrected 0.78 percent to close the week at 11,589.10 and the 30-share BSE Sensex lost 0.66 percent to 38,389.82 after rising 6 percent in previous six straight weeks. But the weekly losses trimmed due to short covering or value buying in last couple of sessions on stability in rupee and crude oil prices.

Broader markets underperformed frontline indices with the BSE Midcap index falling 2.2 percent and Smallcap 1.7 percent in the week gone by.

The weak start to September month does not mean bulls are out of the game. Consolidation may continue for a while until things like crude, rupee and trade war stabilise.

sentiments will continue to remain sluggish. Global clues, macroeconomic data, movement of rupee against the dollar and crude oil price movement will dictate the sentiments in the near term.

Indications are mixed at present and we feel Nifty would face pressure at higher level. Traders should limit leveraged positions and use bounce to reduce exposure. Also, maintain extra caution in stock selection.

We does not expect big fall as fundamentals are improving and a lot of companies in Nifty 50 already benefited from rupee fall. The fall in rupee is a bit of catch-up to other emerging market currencies like Argentina peso, Turkish lira, etc. but the market has done very well despite a sharp fall in the currency.

After the recent correction emerging markets (EM) are good buying opportunities, unless something happens bad in China, which will affect the EM contagion. "Stable dollar and China can get EM out of the woods.

The stock market will remain shut on Thursday for Ganesh Chaturthi.

Here are 10 key factors that will keep traders busy next week:

Rupee

The first key thing to watch out for in the coming week would be the Indian rupee that has seen sharp depreciation to hit a historic low of 72.10 against the US dollar last week, but managed to recover on Friday.

It corrected a percent from 71 to close the week at 71.74. Year-to-date fall in currency was 12.32 percent due to persistent global headwinds and concerns on macroeconomic front.

Experts think rupee will stabilise in next few weeks due to likely intervention by RBI and government, but if it falls more than expectations, the currency depreciation cost could outweigh benefits like exports and automatic adjustment of trade deficit in policy circles.

We believe, policy makers should be equally mindful of the costs of rupee depreciation. There are many components of such cost like India's short term debt obligations at $218 billion due on Dec’18, oil import bill, inflation, consumption and fiscal cost.

On the other hand, dollar demand structurally continued to be strong as data remained solid whether it is jobs or manufacturing.

Crude

Crude is another important key point to look at as after stabilisation from $80.50 a barrel levels to around $71-72 in two-month period moved up again towards $80 followed by correction in last couple of sessions.

Brent crude oil futures lost 0.8 percent during the week and corrected 3.6 percent from the weekly high of $79.72 a barrel on stronger dollar, weakness in equity markets and tropical storm Gordon.

Crude is always a risk for country like India, which imports more than 80 percent of oil requirement.

The key risk is a rise in crude price accompanied by a fall in rupee. Beyond a threshold, this combination is going to push current account deficit to a point where it becomes highly inflationary for the economy and can disturb the fiscal balance. The recent rise in bond yield is indicative of the same and that surely implies the possibility of both earning downgrades and valuation multiple ranges shifting downward.

Trade War

Trade war between world's largest economies US and China seems to be endless as both countries have been playing tit-for-tat game.

After the expected implementation of tariff on $200 billion worth of Chinese goods very soon, US President Donald Trump on Friday announced another tariff list saying the US is ready to put tariff on an additional $267 billion worth in Chinese goods.

Hence, experts said the possibility of talks for trade deal between both countries are fading as there is likely revamp of North America Free Trade Agreement (NAFTA) from the US. "We are surprised by the market which has not reacted to recent US tariff on $200 billion worth of Chinese goods," Mihir Vora, Chief Investment Officer of Max Life Insurance said.

Macro Data

The most important data point to watch out for would be July industrial production and August CPI inflation due on Wednesday. WPI inflation data for August will be announced on Friday.

Industrial production rose to a five-month high of 7 percent in June while CPI inflation fell to 4.17 percent in July, lowest in nine months, driven by cheaper food items.

Foreign exchange reserves for the week ended September 7, deposit & bank loan growth for week ended August 31, and balance of trade for August will also be released on Friday.

Fund Flow

Foreign institutional investors turned net buyers of around Rs 1,900 crore in September so far against more than Rs 2,000 crore worth of selling in August. In FY19 so far, they have been net sellers of about Rs 13,000 crore in India compared to Rs 1,000 crore worth of buying in same period last fiscal.

Experts believe the FII flow is unlikely to improve soon as investors will closely watch indication of general elections before entering in India big way. They expect a consistent flow from domestic institutional investors (DIIs) will continue.

DIIs continued to be net buyers since April 2017 helping the market to remain positive in terms of returns. These investors bought more than Rs 1,100 crore worth of shares in September so far, as per provisional data.

Technical Outlook

The Nifty50 after recent correction moved towards near term resistance level of 11,600 and got support at 11,500-11,550.

The recovery in the last couple of sessions indicated that the index may make an attempt to move towards 11,700-mark but formation of 'Hammer' kind of pattern for last three consecutive days suggested that the consolidation is expected to continue for a while before getting directional move on either side.

Bullish reversal candle on daily scale (Friday) suggests a bounce back move while Bearish Engulfing candle on weekly scale suggests a limited upside, thus a tug of war between bulls and bears are likely to continue.

The index has to continue to hold above 11,550 zones to extend its up move towards its 61.80 percent retracement of 11,620 then 11,666-11,700 zones while on the downside supports are seen at 11,500 then 11,450 zones.

With trade tensions coming into limelight once again, Amit Gupta of ICICI Securities expects Nifty to remain volatile with major support around 11,450 levels.

F&O Picture

Options data indicated that maximum call open interest (OI) of 40.01 lakh contracts was seen at the 11,800 strike price, which will act as a crucial resistance level for September series, followed by 12,000 and 11,600 strikes.

Maximum put open interest of 47.64 lakh contracts was seen at the 11,500 strike price, which will act as a crucial support level for September series, followed by 11,400 and 11,000 strikes.

Call unwinding was seen at immediate strikes while Put writing was seen at 11,500 and 11,600 strikes.

Option band with its early OI inventory signifies an immediate trading range in between 11,500 to 11,700 zones. India VIX had a spurt of 10.24 percent at 13.89 and rise in VIX suggests limited upside in the market.

Stocks in Focus

Tata Motors: Jaguar Land Rover reported total retail sales of 36,629 vehicles in August, down 4.9 percent YoY. Jaguar retail sales up 7.7 percent YoY at 11,802 vehicles and Land Rover sales down 9.9 percent to 24,827 vehicles. Retail sales up 64.9 percent in UK, overseas markets 20.2 percent and North America up 2.5 percent, with Europe slightly below last year (up 3.1 percent) while China sales down 38.1 percent YoY.

Reliance Capital: Company has received Certificate of Registration from the Reserve Bank of India as Core Investment Company - Non-Deposit Taking Systemically Important Institution.

HDFC Life board to meet on September 12 to consider appointment of new MD, CEO

Jet Airways gets government approval to appoint Sharad Sharma as independent director

Axis Bank appoints Amitabh Chaudhry as MD & CEO, to take charge from Jan 1

Adani Enterprises: Adani Agri Logistics (AALL), a wholly owned subsidiary of the company, has incorporated a WOS namely Adani Agri Logistics (Samastipur).

RITES: Company has secured an additional work of Rs 294.67 crore from Ministry of Railways for doubling of Dharmavaram Penukunda rail lines (41.5 Kms) in South Western Railways.

Cyient: Cyient Australia Pty Ltd, a wholly subsidiary of Cyient Limited has acquired 86 percent in Cyient KK (another subsidiary of the company).

Goa Carbon: Production for August at 13,730.8 MT and Sales at 14,726.8 MT.

Akzo Nobel India: Jayakumar Krishnaswamy will be stepping down as the Managing Director of the company with effect from September 12 and Board appointed Rajiv Rajgopal as Managing Director with effect from November 1. Pradip Menon will be stepping down as the Chief Financial Officer of the company with effect from September 14.

Zenith Exports: IL&FS Securities Services released 3,08,224 equity shares of the company, representing 5.71 percent of the paid-up capital on September 6.

Omax Autos: Board has approved the proposal for establishing a new manufacturing unit at suitable location in Uttar Pradesh, for manufacturing products and equipment supplied to Railways.

CES Limited: Company has withdrawn record date of September 21 for bonus issue of 27 equity shares for every 1 equity share held.

Indo Count Industries: ICRA reaffirmed its long term rating as AA minus and revised outlook on the long term facilities to Stable from Positive. CARE reaffirmed long term bank facilities as AA with outlook as Negative.

Mcleod Russel: HDFC AMC through its three funds hold 5.29 percent stake in the company.

Divya Jyoti Industries: Ankit Maheshwari has resigned from the post of Chief Financial Officer of the company w.e.f. September 6.

7NR Retail: Due to pre-occupation Deepak Rawal has resigned from the post of internal auditor of the company for the financial year 2018-19.

Williamson Magor: Board approved the proposal to issue secured redeemable non-convertible debentures of face value of Rs 10,00,000 each aggregating to Rs 100 crore on private placement basis to IL&FS Financial Services.

Sical Logistics: Board approved issue of equity shares on preferential basis.

Reliance Power & Reliance Naval: Both companies pledge shares with Yes Bank.

Bank of Maharashtra: RBI imposes penalty of Rs 1 crore for contravention of master circular on fraud.

Bank of India: RBI imposes Rs 1 crore penalty for contravention of circular on fraud.

Union Bank Of India: RBI imposes penalty of Rs 1 crore for contravention of circular on fraud.

MORE WILL UPDATE SOON!!

Nifty to consolidate amid IIP, WPI data; top 3 stocks to bet on

On a weekly basis, profit booking was seen in the market last week after six consecutive weeks. Along with the Nifty, the Bank Nifty, Midcap and Smallcap indices have also seen strong selling pressure during the first half of the week.

  

Depreciation of the rupee versus the dollar, higher crude prices and worries over a trade war between the United States and China were the main reason for the weekly fall. At the end of last week, the Nifty closed 91.4 points lower against its previous week's close.

This week has only four trading days. We expect the Nifty to consolidate between last week’s high-low levels, with quality stocks rallying. There are many important events this week. Consumer Price Inflation (August) and Index of Industrial Productivity (July) will be declared on September 12. Wholesale Price Inflation (July) will be declared on September 14.

On September 12, Apple will unveil its new iPhones. From an earnings point of view, a bunch of companies are going to announce their results like Reliance Home Finance, Reliance Capital, Power Finance Corporation, Tourism Finance Corporation of India and Rural Electrification Corporation.

Our past recommendations like Dr Reddy’s Laboratories, Ajanta Pharma, L&T Technology Services, Larsen & Toubro Infotech, Suven Life Sciences, Sun Pharmaceutical Industries, ITC, GMR Infrastructure, Mahindra & Mahindra and Adani Green Energy have given fantastic returns in the very short term.

Alkem Laboratories:

Alkem Laboratories produce high-quality branded generics, generic drugs, active pharmaceutical ingredients and neutraceuticals, which market in India and over 50 countries internationally. It has an extensive manufacturing footprint with a total of 16 manufacturing facilities including 14 in India and 2 the United States.

Company is having comprehensive portfolio of over 700 brands covering all the major therapeutic segments. It has reported excellent results for 1QFY19. Its sales and EBITDA grew by 27.19 percent YoY and 86.08 percent YoY, respectively, while PAT increased by 90.26 percent to 136.15 crore. EBITDA margins in Q1FY19 were at 14 percent vs 9 percent in Q4FY18 and 9 percent in Q1FY18.

Last month Company has successfully cleared the USFDA inspection at Baddi plant. At the CMP, the stock trades at a P/E of 38x.

Technically stock is ready for big breakout. Its daily and weekly charts look highly promising. We are recommending a buy for medium term.

Bharat Forge:

Bharat Forge (BFL), the Indian multinational is a technology driven global leader in metal forming having transcontinental presence across ten manufacturing locations, serving several sectors including automotive, power, oil and gas, construction & mining, rail, marine and aerospace.

BFL has posted a quite healthy growth in Q1FY19. Its profit zoomed 33.92 percent to Rs 234.46 crore against Rs 175.08 crore. EBITDA increased 24 percent to Rs 428.8 crore against Rs 345.7 crore while sales increased by 23.2 percent to Rs 1479.66 crore against Rs 1200.08 crore. Its EBITDA margin improves to 29 percent from 28.8 percent.

Company is setting up Aluminum Forging facility at BF PMT in Tennessee, USA at a cost of USD 55 million. This facility in addition to Al forgings in Europe will help company to enhance its presence in the light weighting technology used in passenger vehicles.

Stock is trading at a PE ratio of 39x. The stock looks good on the daily and weekly chart so we are recommending a buy for medium term.

Super Crop Safe:

Super Crop Safe (SUCROSA) is R&D driven agro chemical with focus on niche products. The company has successfully developed and commercialized high margin bio products through its R&D. Such products are Super Gold, triNETRA and Artica which are getting quite strong response from the market.

Company is aiming to launch 3-4 high margin -high demand products from its R&D every year, which will further strengthen its margin. We believe this approach would add vigor to the company's performance in coming 1-3 years.

At CMP, the stock is trading at PE of just 18.15x on its EPS (TTM) of Rs 1.33 per share. The stock is available at a discount compared to industry PE of 40.18x. Company’s EBITDA grew 37.84 percent CAGR in last four years while PAT increased 77.29 percent CAGR in last four years.

For Q1FY19, its PAT soared 41.25 percent to Rs 1.13 crore. Its EBITDA margin for Q1FY19 stands at 11.45 percent as against 7.66 percent in Q1FY18. We believe this stock can become multi-bagger in a long run, so we are recommending a buy for long term investment prospective.

MORE WILL UPDATE SOON!!

Nifty to hold above 11,550 to extend upmove towards 11,620 this week

We See support for the Nifty at 11,500 and 11,450 on the downside.

 

The Nifty drifted lower on Friday but managed to attract buying interest. Strong momentum was witnessed in the last hour of the session, with the index heading towards 11,600. It has been forming a Hammer candle for the last three sessions, which indicates that the decline is being bought into.

It has started to form higher highs-higher lows after weakness was seen in the first three sessions of last week. A bullish reversal candle on the daily scale suggests a bounceback, while a Bearish Engulfing candle on a weekly scale suggests limited upside, thus the tug of war between the bulls and bears is likely to continue.

The Nifty now has to continue to hold above 11,550 to extend its upmove towards its 61.80 percent retracement of 11,620, then 11,666-11,700 zones. On the downside, supports are seen at 11,500, then 11,450 zones.

The index witnessed sharp selling pressure in the first three sessions, but staged a recovery from the lows in the last two sessions of the week. It has negated the formation of higher top–higher bottom on a weekly scale and till it doesn’t surpass its recent top of 11,760, limited upside could be seen in the market.

On the option front, maximum put open interest (OI) is seen at 11,500 and 11,400 strike. Maximum call OI is seen at 11,800 and 12,000 strikes. We have seen call unwinding at immediate strikes, while put writing is seen at 11,500 and 11,600 strikes. Option band, with its early OI inventory, signifies an immediate trading range between 11,500 and 11,700 zones. India VIX spurted to 10.24 percent at 13.89. The rise in VIX suggests limited upside in the market.

The Bank Nifty has broken out of the 27,750-28,388 band after consolidation for the past 19 sessions. It drifted lower to 27,135 zones. It has been forming multiple Hammer candles near its support zone, but follow-up buying is missing above 27,500. Now, it has to continue to hold above 27,440-27,500 zones to surpass its hurdle of 27,750. On the downside, support is seen at 27,165, then 27,000 zones.

We expect stock-specific positive moves in Reliance Industries, TVS Motor Company, Mahindra & Mahindra, Bajaj Finance, JSW Steel, Tata Steel and RBL Bank to name a few, while see limited upside in select banking stocks.

MORE WILL UPDATE SOON!!