Reserve Bank of India (RBI) Governor Raghuram Rajan made investors anxious after he on Saturday announced that he is not going to serve his second term after September 2016. Reacting to the news, domestic stocks markets as well rupee came under pressure in the early trade on Monday. Sensex plunged over 150 points in the morning trade while rupee slid over 60 paise. However, both of them recovered as the day progressed.
Now, Brexit and monsoon progress will drive the market sntiments. Global markets are already facing the jitters of June 23 referendum related to Britain exit from the European Union. This has also impacted the domestic markets, which have remained volatile duirng past few weeks. Besides this, progress of monsoon will give further direction to local markets.
At 1.46 pm, BSE Sensex was trading 166.48 points up at 26792.39, while NSE Nifty was up 48.05 points at 8218.25.
Ajay Bodke, CEO and chief portfolio manager-PMS, Prabhudas Lilladher said, “It is neither ‘Rexit’ or ‘Brexit’ but monsoon that should be worrying investors more as nearly 60 per cent of Indians still depend on agriculture and allied activities and with two successive monsoon failures the need for a normal monsoon to kick-start rural demand cannot be under underestimated. He further added, “We have already seen a 25 per cent deficiency in rains till June 15, 2016 although IMD as well as private weather forecasters are unanimous that July-Aug-September will see copious rains and overall we would have an above-normal monsoon.”
Below are 5 stocks on which market experts are looking bullish in the present scenario.
Recommended By: Sharekhan
Investment Rationale: In FY2016, the global agrochemicals market encountered most challenging year due to drought conditions, weak commodity prices, volatile currencies, depressed cash flows of farmers and deferred purchase of agrochemicals by farmers. As a result, the global agrochemicals market contracted on year-on-year (YoY) basis in FY2016. However, generic-focused UPL bucked the global trend and reported 10 per cent YoY growth in FY2016 revenue. Sharekhan expects UPL’s topline and the bottomline to grow at a CAGR of 13 per cent and 20 per cent, respectively over FY2016-FY2018. This will be driven by good operating performance in most of its geographies and launch of new innovative products across markets. The brokerage house has ‘Buy’ rating on UPL with a revised price target of Rs 660. On June 17, the scrip was trading at Rs 567.40.
Recommended By: Prabhudas Lilladher
Investment Rationale: The brokerage house is bullish on Voltas over medium-to-long term, given improving margin profile of fresh orders, strong consumer business franchisee, healthy balance sheet and cash flow. Prabhudas Lilladher expects stock to deliver earnings CAGR of 18 per cent over FY16‐18E. The share price Voltas can touch Rs 350.
Recommended by: Centrum Broking
Investment Rationale: KPIT Tech could be poised for a resurrection, as company’s focus returns on balance sheet discipline and free cash flow generation. With inorganic initiatives taking a back seat and cloud shift leading to leakage in ERP segment revenues, Centrum believes that dollar revenue growth trajectory can remain moderate over the medium term. Management has guided that 1HFY17 would be soft on revenue growth front and guided for recovery only towards 2HFY17. The brokerage house expects improving margin trajectory and model EBIDTA margin at 14.8 per cent each in 2016-17 and 2017-18E (vs 13.5 per cent in FY16). Valuations remain humble at 9.9x FY18E EPS, which is at 26 per cent discount to Mindtree. Risk return remains favourable. Centrum initiated coverage of KPIT Tech with ‘Buy’ rating for a target price of Rs 225.
Recommended By: Kotak Institutional Equities
Investment Rationale: Weak commodity prices made FY16 a tough year for leveraged names—Vedanta walked a tight rope in managing cash flows at its standalone entity and used a combination of working capital release and debt (buyer’s credit, NCD, CPs). The recovery in prices, especially of zinc and oil coupled with volume ramp-up in aluminium and power makes FY17-18E more promising and Kotak expects liquidity concerns to ease gradually. The brokerage house has ‘Buy’ on Vedanta with a revised target price of Rs 140.
Recommended By: Angel Broking
Investment Rationale: Uptick in defense capex by government, coupled with BELs strong market positioning, indicate good times ahead for BEL. The brokerage house believes the share price of Bharat Electronics can touch Rs 1,414.