This week, the Nifty has strong support at 10,200-10,140 levels and resistance at 10,445-10,525 levels
Sumit Bilgaiyan
Equity99
The market has reversed after rallying for three-sessions, with the Nifty returning back above 10,300 levels. The index had corrected 168.95 points on a weekly basis and 406.45 points from its intra-week high led by financial stocks.
Foreign investors (FPI/FIIs) have pulled out Rs 93,392 crore since January, of which Rs 33,343 crore are from equities. As a result, the Nifty is down 13 percent from its recent highs, with midcaps and smallcaps hurt the most. Most midcaps and smallcaps are available 40-60 percent cheaper since January.
India is facing some macro problems and liquidity issues, but micro factors still remain strong. Liquidity issues may be resolved in the next 4-6 months.
The next 6-8 months are the best time to invest in a staggered manner in quality stocks. Investors can also start additional systematic transfer plans in mutual funds for the next 8-12 months.
This week, the Nifty has strong support at 10,200-10,140 levels and resistance at 10,445-10,525 levels.
A number of companies will announce their results this week. These include: Alembic Pharma, Asian Paints, GSK Pharma, Hindustan Zinc, Oberoi Realty, Adani Ports, Bajaj Finance, Bajaj Finserv, HCL Technologies, HDFC Life, RBL Bank, Bajaj Auto, Jubilant Foodworks, Kotak Mahindra Bank, L&T Finance, M&M Finance, Bharti Airtel, Biocon, JSW Steel, Maruti Suzuki, Yes Bank, ICICI Bank, Nestle and UPL.
Here is the list of top three stocks which can offer better returns over the medium to long term.
Amarjothi Spinning Mills is a major supplier of melange yarn to the Tirupur market with its local presence. The company has been improving its share of value added yarn in the market in the form of Dyed fibre yarn, Dyed cotton yarn, PC yarn, etc.
It had posted excellent numbers for Q1FY19. Its sales grew by 7.42 percent YoY and 18 percent QoQ basis while PAT increased by 24 percent YoY and 223 percent QoQ basis.
With an equity capital of Rs 6.75 crore and reserve of Rs 104 crore, ASML's share book value works out to Rs 170 and P/BV ratio is below 0.55x, which is attractive.
At the CMP, the stock trades at a P/E of just 4.2x on TTM EPS. Well-known investor Anil Goel holds 3.11 percent stake in the company. Stock has almost corrected 62 percent from its 52-week high price of Rs 244.5. We are recommended a buy for medium to long term.
Suven Life Sciences is a pharmaceutical research company that leverages its innovation capability to undertake NCE-based CRAMS projects involving discovery and development of molecules for innovator companies.
During Q1FY19, its net profit increased by 31.34 percent on YoY basis on 35.9 percent higher income of Rs.191.66 crore. It is continuous dividend paying company. It has paid 100 percent dividend in FY17 & paid 150 percent dividend in FY18.
Suven Life Science is on a path to strengthen its core revenue from CRAMS business. The successful completion of trials for SUVN502 would lead to monetisation of this molecule and ultimately boosting its earnings. SUVN502 which is a lead molecule for patients with moderate Alzheimer’s, SUVN-502, is in phase-2A.
Management expects enrollment to be completed soon and results is expected to be out in Q2FY20. Suven trades at PE ratio of 18x earnings. We are recommending a buy in staggered manner for medium to long term.
PFC specialises in power sector financing, providing fund and non-fund based support for development of power projects in India. The company's project financing activities are primarily focused on the thermal and hydro-energy generation areas. It has also initiated financing of projects based on renewable energy sources such as bio mass and wind power generation.
It has reported excellent results for Q1FY19, NII has improved by 4.44 percent while PAT increased by 22.34 percent YoY. At CMP, the stock is trading at P/E of just 3.55x.
Company is paying huge dividend every year and dividend yield is above 9.5 percent based on last year's dividend payout.
Company's total loan asset of Rs 2,78,915 crore as on March 2018 – out of which 89 percent of the loan assets are regular in servicing of dues and no stress is envisaged. We are recommending a buy in staggered manner for medium to long term.
Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
