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Showing posts with label nifty future. Show all posts

Tuesday, 19 March 2019

Get set for record highs on Sensex, Nifty; 10 stocks to buy for long term

The S&P BSE Sensex has already rallied over 2,000 points so far in March while Nifty has seen a fierce up move of 634 points, and both indices are on track to surpass their respective highs in near future.

The S&P BSE Sensex is just 2.5 percent away from its record high of 38,989 hit on August 29, 2018, while Nifty50 is just 2.9 percent away from its record high of 11,760 registered on August 28, 2018.

Nifty Bank has been leading the rally and history suggests Nifty follows suit whenever there is a breakout. Nifty Bank hit a record high of 29,812 on Monday. It has already rallied 2,592 points, as of closing on March 15.

Experts feel that long-term investors should buy into this market on dips as the upside is still intact and it looks like we are on our way to hit fresh record highs.

However, stock selection is key as liquidity inflow from foreign investors has pushed many small & midcap names higher. In a matter of weeks, they have recorded double-digit returns outperforming largecaps in the same period.

Ahead of the elections, foreign investors have developed an appetite for Indian equities. FIIs bought equities in Indian market worth over Rs 30,000 crore so far in 2019.

"We can safely say that what we are seeing is a massive catch-up rally. We are in the middle of a massive global bull market that is fuelling liquidity, and India is catching up," said Atul Suri, CEO-PMS at Marathon Trends in an interview with CNBC-TV18.

Commenting on the Nifty, he said that we are on track to hit lifetime highs around 12,000 level. However, he sees rising crude oil prices as the "dark cloud" for the market.

Atish Matlawala of SSJ Finance & Securities, told Moneycontrol that both Sensex and Nifty are currently trading at their six months highs and are moving towards an all-time high level of 38,985 and 11,751, respectively.

“From there, we can see upside rally which can breach Sensex and Nifty lifetime highs. Assuming we have a stable government at the Centre, by the end of 2019, we see Sensex and Nifty at 41,000 and 12,100 levels respectively,” he said.

The best strategy in the current market for investors would be to start accumulating good quality large as well as mid-cap stocks from a medium to a long-term perspective.

Moneycontrol spoke to two fundamental experts and here’s what they have to recommend for a minimum time horizon of one year. All these stocks have seen some correction in the past and are available at fairly attractive valuations:

Analyst: Vipin Khare- Director of Research, William O'Neil India

Reliance Industries:

The company delivered better than expected performance in the recent quarter with superior efficiency in its oil refinery business and at the same time showing growth in its retail, as well as telecom (Jio) segment.

It plans to tap into the domestic retail market through both online and offline channels backed by the strong infrastructure of Jio. Technically, it has held itself above key moving averages during the sell-off in the markets.

Divis Laboratories:

It is likely to benefit from increased opportunities in the generic space caused by the supply disruption from China. It has announced capex plans of Rs 12,000 crore for the two brown field projects which are expected to be completed by the end of 2019.

Technical set up for the stock looks good as it has surpassed its 21-DMA. The stock has outperformed the benchmark indices and has a strong up-trending Relative Strength (RS) line in a weak market.

Titan Company:

With better than estimated Q3 FY2019 results, the company has continued with its strong revenue and EPS growth.

The stock is forming a tight area in a weak market and has maintained its strong price-strength. It trades constructively above its key moving averages amid non-rallying market.

Tech Mahindra:

Given the recent resilient performance by the IT sector, this is a technically good stock to keep in one's portfolio. Technically, the stock has outperformed the benchmark indices during recent sell-off and has only moved sideways when Nifty50 was in a selling spree during recent few sessions, showing the improving relative strength. Post the buyback announcement, the stock has also seen accumulation in recent sessions.

UltraTech Cement:

This is a stock to keep on the watch list for investors. Cement sector has shown strength in recent sessions.

With improved IIP data in recent periods, the revival of the construction sector, GST relief to real estate sector, cement companies are likely to benefit from the impending demand push.

The stock has retaken its 50-DMA amid recent accumulation. It'll be actionable if it continues to show technical strength and retakes its 200-DMA.

Analyst: Vinod Nair, head of research at Geojit Financial Services

Bharat Electronics

BEL’s current order backlog is Rs 48,000 crore (5x FY18 sales) provides strong visibility for the next three years. 9MFY19 order inflow was up by 145 percent to Rs 16,500 crore.

Given BEL’s niche technological and execution capabilities, improved order inflow outlook and GoI focus on indigenous procurement, we remain positive on BEL.

Currently, BEL is trading at a 1-year forward P/E of 11.7x, which is a 38 percent discount to its 5-year average of 19x. It seems an attractive bet given strong order book visibility.

Exide Industries:

EIL is focusing on cost control initiatives and technological up-gradation as strategies will improve the market share from the unorganised sectors.

We expect the demand scenario for 2W to remain strong for FY20 led by increased rural income, higher MSP and new product launches by OEMs.

EIL will be the direct beneficiary as it has 86 percent market share in two-wheelers. We remain positive on the long term outlook of EIL, owing to higher acceptance of battery engineering.

We value EIL at 15x FY21EPS (20 percent discount to its historical average) and insurance business at 2x FY18 EV (embedded value).

Avanti Feeds:

AFL has recently completed its major capacity expansions in both Feeds (1,75,000MT-40 percent of existing capacity) and Processing (15,000MT- 200 percent of existing capacity) segments that will support future growth.

AFL has a strong track record of growing above industry growth in the last five years. In FY18, it witnessed an unusual margin gain of 750bps which is unlikely to sustain due to subsequent correction in shrimp and RM prices and demand slowdown in the US.

We expect PAT to de-grow in FY19E but to normalize post FY19E. AFL is diversifying shrimp exports to Europe and China and is planning feed export to other countries which will support revenue growth.

AFL is currently trading at 11x 1Yr Fwd P/E which is at 49 percent discount to its 2-year average.

Can Fin Homes:

In Q3FY19, the net interest income (NII) grew at a modest pace of 8 percent on a YoY basis, with NIM at 3.3 percent and net profit increased 21 percent YoY on the back of zero provision cost.

We expect net profit to increase at a CAGR of 16 percent over FY18-21E led by healthy growth in loan book along with lower provisioning expenses.

We continue to remain positive on the stock on the back of healthy asset quality, a well-balanced borrowing profile and consistent management focus.

Going forward, we expect the company to generate RoA of ~2 percent and RoE of 20 percent over FY18-21E. Currently, the company is trading at 1-year forward P/B of 1.8x, which is at 36 percent discount to its 5-year average of 2.8x.

PNC Infratech:

The company reported a robust revenue growth of 54 percent YoY to Rs 727 crore in Q3FY19 led by strong execution of big-ticket orders.

While 9MFY19 revenue growth remains strong at 86 percent YoY to Rs 2,021 crore, PNC has received financial closure for all seven projects and four of these projects achieved appointed date and execution is currently in progress.

Order book remains robust at Rs 12,478 crore, which is 4.5x TTM revenue that provides improved visibility in the coming years. Execution is likely to smoothen going forward as the majority of its project’s construction has started.

Additionally, Nagpur– Mumbai expressway EPC project (Rs 2,000 crore) received the appointed date and project is currently under construction.

The benefit of higher execution and operational efficiency will stimulate earnings to grow at a CAGR of 27 percent over FY18-21E. Currently, the PNC is trading at 1-year forward P/E of 12x, which is at 32 percent discount to its 5-year average.

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Source: Moneycontrol

Monday, 18 March 2019

Bank Nifty should settle at 29,650 in the near term: Shrikant Chouhan

In the week ending March 8, we were of the view that if Nifty crosses 11,090 then it would shift the base of trading from 10,550 to 10,850 and it would extend targets from 11,200 to 11,400.

Well, market did exactly the same in the previous week and managed to close at 11,426 on a weekly basis. Bank Nifty had surprised everyone by closing almost 1,000 points higher than the highest high of 28,390 level.

However, it happens whenever foreign investors participate actively in the market. Since the last two years, foreign investors were either sellers or silent but in last 10-12 days, they pumped more than Rs 25,000 crores, which is a record-breaking investment in a very short time frame.

On the contrary, in October 2018, Indian equities witnessed record-breaking outflow from FIIs which pulled the market from 11,000 to 10,000 levels, which was nearly 1,000 points fall from the highest of the month.

In both cases, Indian rupee responded to the direction of FIIs movement.

However, active response from RBI has changed the sentiment. In the long run, current FII investments are certainly healthy for the market.

Most of the time while investing they follow the approach of top-down in any country. It shows that macros and micros are going to improve in the long run.

For the current week, technically, we feel that the markets have approached extreme levels in the short term, and some consolidation could be seen.

As per options data and India Volatility Index (VIX), the market should come under a quick drop to 11,320-11,290. However, it would remain the last opportunity for positional traders to cover up their short sell positions, which they have created at earlier resistance (11,100 levels).

Any fall beyond 11,300 would be a fresh buying opportunity in the market. Ultimate supports exist at 11,150 and 11,000, which was earlier resistance zone for the market.

On the higher side, chances of hitting 11,600-11,650 are bright in the next few weeks. Resistance exists at 11,490 and 11,550.

In brief, Nifty is poised to hit the level of 11,600-11,650; however, prior to that, we can expect a minor decline to 11,320-11290 levels.

On Monday, in case Nifty fails to cross 11,490 then it would result in a gradual decline to 11,320 levels. Bank Nifty should arrest at 29,650 in the near term. Support levels exists at 29,000-29,800.

If Nifty fails to cross 11,490, take a contra bet of selling short around 11,465-11,475. For that keep a final stop loss at 11,510.

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Source: Moneycontrol

Tuesday, 12 March 2019

March FII inflow at Rs 8,000 cr, boosts Sensex to 6-month high

Foreign Institutional Investors (FIIs) poured in over Rs 3,800 crore on March 11 taking total inflows to a little over Rs 8,000 crore so far in March. This pushed the S&P BSE Sensex to a 6-month high.

Meanwhile, the rupee touched 2-month high. The Indian rupee advanced by 25 paise to close at 69.89 against the US dollar in line with a strong rally in domestic equities, reflecting positive investor sentiments amid hopes that the incumbent NDA government will get the second term.

String flows from foreign investors pushed benchmark indices to break above their crucial resistance levels. The S&P BSE Sensex closed above 37,000 on March 11 for the first time since September 19, 2018, while Nifty50 reclaimed 11,100 for the first time since September 21.

FPIs were net buyers (equity and debt) in February as well as January 2019 for Rs 13,564 crore and Rs 127 crore, respectively. The positive change in sentiment is triggered by domestic as well as global factors and the trend is likely to continue for some more time.

US Fed commentary, expectations of a recovery in earnings, as well as expectation of a stable government at the Centre are some factors that might be triggering a rally in Indian markets, suggest experts.

In February, foreign portfolio investors (FPIs) had invested a net amount of Rs 11,182 crore in the capital markets (both equity and debt).

“FPI inflows into India has clearly turned positive since the end of January this year. The flows in February were the highest since November 2017. The trigger for this inflows is the dovish statement that came from the Fed at the end of January,” VK Vijayakumar Chief Investment Strategist at Geojit Financial Services told Moneycontrol.

“The Fed had categorically stated ‘the rate hikes are on hold’ in the context of the global slowdown. India, like other emerging markets, is receiving capital flows due to this trigger,” he said.

He further added that corporate earning in India is likely to grow around 25 percent in FY 2020. Therefore, India is likely to attract continuing capital flows for the rest of the year.

The positive sentiment in small and midcaps helped these indices outperform the benchmark by a wide margin in March.

The S&P BSE Midcap index has risen 5.4 percent in March so far, while the S&P BSE Smallcap index gained 7.8 percent. In comparison, S&P BSE Sensex has moved up 3.3 percent this month.

The banking sector has also seen a lot of momentum with the Bank Nifty rising 4.3 percent in March so far.

“The sentiment on Indian market has made a dramatic comeback as mid and smallcaps have seen stellar run for the past two weeks. The market has seen broad-based robustness with buying interest visible across the sectors,” Jagannadham Thunuguntla, Sr VP and Head of Research (Wealth), Centrum Broking Limited told Moneycontrol.

“FIIs have continued their aggressive buying triggering a pre-election rally. The months of February and March 2019 have seen FII inflows to the tune of Rs 20,000 crore. As border tensions appearing to have cooled-off, and global central bankers turned pro-liquidity, Indian markets are in the risk-on mood,” he said.

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Source: Moneycontrol

Monday, 11 March 2019

Nifty likely to trade higher; deploy Bull Call Spread to take advantage

The upward momentum continued for Nifty as the index closed the last week with gains of over a percent and a half. The truncated week saw larger participation coming from the banking names as the Bank Nifty rose 2.5 percent compared to Nifty50.

Among index futures, Nifty added over 4 percent longs in open interest (OI). Bank Nifty, on the other hand, had significant long additions in the first two sessions of the week, adding about 46 percent in open interest for the week.

Among stock futures, apart from defensive sectors like pharma, FMCG and IT most of the sectors saw either incremental longs or covering of shorts.

Stocks like BEML and Vodafone Idea saw bargain hunting longs, while RBL Bank added continuing longs. ACC and select metal stocks witnessed short covering, while Apollo Tyre and Oil India Ltd added notable shorts.

For Nifty options front, there was some encouragement as the upcoming weekly series on Nifty started off with sizable additions in 11,000 Put, which is the infamous known hurdle.

On the upside, the congestion is held at 11,200 and 11,500 in the upcoming weekly and monthly series respectively.

Bank Nifty, on the other hand, after a stupendous run is placed close to consensus hurdle at 28,000 as indicated by heaviness in both immediate monthly and weekly series options.

Sentimentally too, Nifty is not viewed from over exuberance perspective. Aggregate OIPCR, after hitting the high of 1.8, did subside to 1.6 towards the end of the week, keeping further room for optimism.

On the other hand, India VIX kept up with downward trajectory and ended the week at the low point of 2019.

While on one hand, we have a lot of optimism already built into the F&O data, on the other we cannot overlook the placement of index close to recent high.

Hence a moderate stance would be more prudent via Bull Call Spread to trade further upside.

Bull Call Spread is a bullish strategy that expects a positive move in underlying. It is an idle strategy to play for positive bias along with being completely hedged.

Under this strategy, one should buy 1 lot lower strike call and sell 1 lot of highest strike call. Maximum profit is the difference in strikes less net outflow. Lower end loss is restricted to initial outflow.

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Source: Moneycontrol