Top smallcap, midcap stocks to buy: These shares set to rally in next 6 months; check target prices

During the April-June quarter of the financial year 2020-21, Sensex soared 23.5 per cent and Nifty index gained 25 per cent

Even in the current uncertain scenario, the Nifty Midcap and Smallcap segment are at the verge of the next major bull market, signalling their outperformance going ahead. According to ICICI Direct Research report, select stocks such as Balkrishna Industries, Rallis India, Bajaj Electricals and Trent may offer up to 27 per cent return in the next six months of 2020. During the April-June quarter of the financial year 2020-21, S&P BSE Sensex soared 23.5 per cent and the broader Nifty 50 index gained 25 per cent. The Nifty Midcap 100 index has rallied over 28 per cent and Nifty Smallcap 100 index surged 30 per cent during the same period, outperforming the frontline indices.

“Relative ratio of Mid and small-cap indices/ Nifty is at cyclical low and now turning up, signifying outperformance ahead after a two-year bear phase,” ICICI Direct said. The brokerage firm further added that the sentiment as represented by 14-month RSI (momentum oscillator) at less than 35, is at major cycle low, last observed in CY08 and CY13. “In both instances, such readings have laid the foundation of the next major bull market,” ICICI Direct Research said. The brokerage firm has identified the aforementioned stocks that believe that they have an ability to withstand the storm and take off once the runway is clear.

Balkrishna Industries: The leading tyre manufacturer domestically in the off-highway tyre (OHT) segment is primarily meant for exports. The brokerage firm said Balkrishna Industries stock has been a key outperformer within the Auto pack as it registered a sharp rally off its key support around Rs 680, resulting in a bullish double bottom reversal pattern which augurs well. It has pegged a target price of Rs 1,535, an upside of 20 per cent from yesterday’s close. 

Rallis India: This agrochemical company has been predicted to accelerate upward momentum towards Rs 325. “The company’s seed portfolio is primarily focused on the Kharif season, which the management has been planning to expand to some Rabi crop. This should diversify the revenue stream in the years to come,” the brokerage firm said. The price target of six months is Rs 330, an upside of over 21 per cent.

Trent: ICICI Direct research has given a price target of Rs 778, an upside of over 27 per cent from yesterday’s close. “We expect the stock to maintain positive bias and challenge its life-time high around Rs 800 levels in the coming months,” it said. Trent’s flagship store format ‘Westside’ generates one of the highest gross margins in the industry.

Bajaj Electricals: The consumer durable company is expected to continue its up move and head towards Rs 470, an upside of 21 per cent. “We believe the growth momentum in the consumer-facing business is likely to continue given Bajaj’s strong presence in the semi-urban and rural markets where the impact of COVID-19 infections are very limited,” it added.

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)