What a week! The Nifty created history by touching mount 9,200 but saw selling pressure, which pulled the index towards its immediate support of 9,150. However, it still closed 2.5 percent higher for the week ended March 17.
The technical indicators might be pointing towards overbought zone but that’s what happens when the euphoria grips markets. This is not the time to go short, but traders can still book partial profits and add positions on the decline.
The liquidity-driven rally can stretch towards 9,500-9,600 in quick time, going by commentary from both fundamental and technical analysts. And, till that time investors should continue with their long positions.
Riding high on the liquidity bandwagon, the Nifty, which has already rallied over 12 percent so far in 2017, looks poised to hit 9,500-9600 mark in the next 4-6 weeks, said Mohammed Apabhai, head of Asia trading strategy at Citigroup Global Markets in an exclusive interview with CNBC-TV18 on Friday.
The market is currently driven by global liquidity and it would be too early for investors to take money off the table, he said.
On the technical front, Nifty has broken out of a downtrend line resistance formed joining previous peaks triggering a bull trend reversal.
“Further, a sustained trade beyond 8,950 level may extend the bull run to levels of 9,225-9,575 in the coming trading sessions,” Yes Securities said in a note. “However, failure to hold support levels of 8,950 can trigger corrections dragging the index lower to levels of 8,720-8,570,” it said.
We have collated a list of top 10 stocks picks from the fundamental perspective for the next 12 months.
PI Industries: BUY| Target Rs 1,060
Citigroup maintains a buy call on PI Industries with a 12-month target price of Rs 1,060. Newer products ramping up well which should auger well for the stock. Acceleration in revenue growth will depend on a recovery in global agrichemical demand.
The stock is well positioned to benefit from growth in domestic agri-chem and exports, said the Citigroup report.
InterGlobe Aviation: ADD| Target Rs 1,060
Kotak Institutional Equities maintains add on InterGlobe Aviation with a 12-month target price of Rs 1060. The management noted small improvement in industry-wide yields in recent months, buy further cuts in yield will come at the expense of competition’s (weak) margins.
Kotak is of the view that fares are now aligned with competition which will lead to yield stabilising in FY18-19E. The domestic firm maintains a positive stance and sees earnings growth gaining momentum from Q1FY18.
Biocon: BUY| Target Rs 1315
Citigroup maintains a buy recommendation on Biocon but raised its 12-month target price to Rs 1,315 from Rs 1,180 earlier. The Mylan-Biocon’s settlement with Roche takes litigation risk out of the picture, said the note.
Biocon is amongst the small list of players with tangible upside from biosimilars over 18-24 months, said the Citigroup note.
Alkem Laboratories: BUY| Target Rs 2285
HSBC maintains a buy recommendations on Alkem Laboratories but raised its 12-month target price to Rs 2,285 from Rs 1,995 earlier.
Alkem targets US sales push with the focus on increasing backward API integration. The India business remains stable with a continued performance from top brands. Quicker resolution of Form 483 at Daman facility provides comfort on FDA issues side, said the note.
Dhanuka Agritech: BUY| Target 857
HSBC maintains a buy recommendation on Dhanuka Agritech but raised its 12-month target price to Rs 857 from Rs 790 earlier.
The management expects advance procurement of inputs which will help in margin expansion in FY18. The company’s focus on in-licensed products should lead to above industry growth in medium term.
HSBC sees 17 percent sales CAGR over FY16-19 estimates and a 27 percent PAT CAGR due to margin expansion in the same period.
Torrent Pharma: BUY| Target Price Rs 1592
IDFC maintains a buy recommendation on IDFC with a 12-month target price of Rs 1592.
Torrent Pharma is one of the most scalable mid-cap pharma models with a highly profitable branded formulations business in India/Brazil/RoW and a promising US business.
The management focus on improving profitability across segments and sharply stepping up R&D investments along with a willingness to actively explore M&A options augurs well for the stock in the medium term.
Aurobindo Pharma: Outperform| Target Rs 873
IDFC maintains an outperform recommendation on Aurobindo Pharma with a target price of Rs 873. Aurobindo Pharma is comparable with large-cap peers in terms of scale of operations and profitability profile, along with a much better execution track record in the recent past.
“We expect the prevailing discount to large-cap peers to gradually shrink with Aurobindo’s sustained earnings delivery in the next few quarters. Its 9MFY17 performance has lagged estimates as the ANDA approval momentum hasn’t quite translated into revenue growth,” it said.
With the expected pickup in launches from Q4 onwards combined with expectations of another 40-45 new ANDA approvals in FY18, IDFC expects a steady pickup in US revenues in coming quarters.
GSPL: BUY| Target Price Rs 195
IDFC maintains a buy recommendation on GSPL with a 12-month target price of Rs 195. GSPL is a strong play on improving LNG supply in its core area of Gujarat, which is the most developed gas market in India, with a well-connected gas grid.
Strong volumes coupled with the imminent hike in tariff (via the recent PNGRB amendment modifying volume norms) are likely to drive an 8% CAGR in transmission volumes and an 18 percent CAGR in earnings over FY16-19E.
Rallis India: BUY| Target Price Rs 302
IDFC maintains a buy recommendation on Rallis India with a 12-month target price of Rs 302. “We expect Rallis India to deliver sustained growth mainly helped by its well-established distribution reach, presence across key product segments and ability to introduce new products,” said the note.
Rallis is one of the fastest-growing companies in the hybrid seeds segment with strong product offerings in hybrid rice, hybrid corn, and Bt cotton. IDFC expects the company to deliver earnings at 20 percent CAGR over FY16-19E supported by improving
HPCL: Outperform| Target Rs 650
IDFC maintains an outperform rating on HPCL with a 12-month target price of Rs 650. “We expect HPCL to continue to show robust earnings momentum over FY17-19E on the back of stronger refining performance, increased marketing volumes (market share gains from peers and growth in higher-margin Lubes segment) and healthy marketing margins,” said the note.
Valuations of 8.1x FY19E consolidated EPS remain highly attractive given average RoCE of 14 percent over FY17-19E. IDFC reiterates outperformer with a target price of Rs650.
(Views and recommendations given in this section are the analysts’ own and do not represent those of Chillicious. Please consult your financial adviser before taking any position in the stock/s mentioned.)