'Nifty may face resistance at 11,825-11,900; buy on decline is the best strategy'

Sumit Bilgaiyan

The market turned highly volatile during F&O expiry week as India VIX touched 25.

At the end of the week, Nifty managed to close 2 points higher against previous week but during the week market breadth remained weak which is a negative sign.

Crude oil touched USD 75 per barrel but showed sharp fall from higher level. During the week, Axis Bank, Ultratech Cement and Tata Steel posted robust numbers while Maruti Suzuki, ACC, Hero Motocorp and Yes Bank posted poor numbers.

Sumit Bilgaiyan

Founder|Equity99.com

• 'Betting on BHEL & Britannia with medium-to-long term investment horizon'

• 'Expect Nifty to remain rangebound, stay stock specific'

• 'Expect Nifty to be rangebound, April to see stock-specific rally'

We are still bullish on market and buy on decline will be the best strategy for coming days.

Many companies like Bank of Maharasthra, Reliance Nippon, Castrol, Trent, Orient Cement, Kotak Mahindra Bank, Zensar Tech, Godrej Properties, Ajanta Pharma, Ambuja Cement, Can Fin Homes, Concor, Gruh Finance, Raymond, TVS Motor, Exide Industries, Britannia Industries, Gujarat Gas, Future Life, Dabur, Blue Star, MRF, Kansai Nerolac, Tata Power, Radico Khaitan, Bandhan Bank, HUL, Godrej Consumer, Tata Chemicals, Century Textile, etc will declare their Q4 results during this week.

For the week, Nifty has strong support at 11,660-11,570 levels and resistance at 11,825-11,900 levels.

Dr Reddy’s Laboratories:

Finally stock has given comfortable close above consolidation zone on weekly chart which is technically bullish sign. Dr. Reddy's Laboratories is an integrated pharmaceutical company, committed to providing affordable and innovative medicines for healthier lives. Through its three businesses - Pharmaceutical Services & Active Ingredients, Global Generics and Proprietary Products - Dr. Reddy's offers a portfolio of products and services including APls, custom pharmaceutical services, generics, biosimilars and differentiated formulations.

Its major markets include - USA, India, Russia & CIS countries, and Europe. During 9MFY19, its PAT grew 121.54 percent to Rs 1494.7 crore from Rs 674.7 crore on 7.41 percent higher sales of Rs 11123.4 crore.

Stock trades at PE ratio of 27.5x. During Q3FY19 in global generics segment company’s emerging markets revenue grew 31 percent, Russian markets revenue grew 22 percent, other CIS countries revenue grew 45 percent, Indian markets revenue grew 10 percent while North American markets revenue declined 8 percent. Company will announce Q4 numbers on May 17, 2019. We are recommending a buy in staggered manner for medium to long term.

Aurobindo Pharma:

Aurobindo Pharma is a world-leading marketer and manufacturer of generic pharmaceuticals and active pharmaceutical ingredients. The company’s robust product portfolio is spread over 7 major therapeutic/product areas encompassing Antibiotics, Anti-Retrovirals, CVS, CNS, Gastroenterologicals, Anti-Allergies and Anti-Diabetics.

The US and Europe are Aurobindo’s two most important markets accounting for over 70 percent of the company’s USD 2.6 billion sales. During 9MFY19, its net profit stood to Rs 1779.31 crore on 14.53 percent higher sales of Rs 14023.94 crore.

During Q3FY19, its US formulations sales grew 27.4 percent, Europe formulation sales grew 10.3 percent, growth markets sales grew 36.1 percent and APIs sales grew by 20.4 percent. FPIs hold 21.47 percent while Mutual Funds hold 13.45 percent stake in this company. It paid 125 percent interim dividend for FY19.

At the CMP, the stock traded at a P/E of 21x. We are recommending a buy in staggered manner for medium to long term.

Oil India:

Oil India explores for, develops, and produces crude oil and natural gas in India and internationally. The company operates through Crude Oil, Natural Gas, Liquefied Petroleum Gas (LPG), and Pipeline Transportation segments. It is also involved in the transportation of crude oil; and production of LPG, as well as in the provision of exploration and production related services.

The company owns and operates 1,157 kilometers of cross-country crude oil pipelines; and 13 drilling rigs and 14 work-over rigs, as well as owns 10 crude oil pumping stations and 17 repeater stations in Assam, West Bengal, and Bihar states.

For 9MFY19, its PAT grew by 55.36 percent to Rs 2798.68 crore from Rs 1801.43 crore on 39.04 percent higher income of Rs 10648.07 crore fetching an EPS of Rs 24.66.

At the CMP, the stock traded at a P/E of 5.5x. Company paid 150 percent dividend for FY18 & paid 85 percent interim dividend for FY19. We are recommending a buy in staggered manner for medium to long term.

(The author is Founder at equity99.)