Domestic equity markets are trading weak on Monday following global cues after US Federal Reserve chair Janet Yellen and Vice Chairman Stanley Fischer indicating a rate hike in future but not committing on a timeline. Economic Affairs Secretary Shaktikanta Das’ statement that India is expected to clock a GDP growth of nearly 8 per cent this fiscal on the back of good monsoon rains also failed to boost sentiments.
The NSE Nifty and BSE Sensex were trading below the psychological 8,600 and 27,800 levels respectively on Monday. At 11.52 am, Sensex was trading 5.80 points up at 27,788.05, while NSE Nifty was trading 1.10 points up 8,573.65.
Sensex closed 294.75 points down at 27,782.25, while NSE Nifty ended 94.35 points down at 8572.55 in a choppy week ended August 26, 2016, following selling pressure in capital goods, metal, realty and power stocks further dented market sentiments.
Vijay Singhania, founder-director, Trade Smart Online on markets’ movement said, “Nifty continues to trade under pressure. Needless to say, we’re still in consolidation phase and need a decisive trigger for the next directional move. Unfortunately, our recent domestic events have failed to provide that push so far and now all eyes are on the global markets. On index front, either side decisive break from prevailing range that is 8500-8700 in Nifty would set the tone ahead.”
This week will be dictated by auto stocks that will hog limelight as companies would start unveiling monthly sales data for August, from Thursday along with purchasing managers’ index (PMI) data for manufacturing sector scheduled this week. DLF, MOIL, Indian Oil Corporation and Bharat Petroleum Corporation will announce their first quarter results this week.
With the help of brokerage houses, we identify 5 stocks that could be good buy:
For the quarter ended June 30, 2016, consolidated net profit of Tata Power slipped by 76.09 per cent year-on-year to Rs 72.49 crore against Rs 303.14 crore in the corresponding quarter a year ago. Net sales of the company dipped by 5.05 per cent year-on-year to Rs 6806.53 crore against Rs 7168.23 crore in the same quarter last year. Reliance Securities believes that most of the near-term risks in terms of losses from Mundra projects and lower coal prices have already been reflected in the share price, the brokerage have ‘Buy’ recommendation on the stock with a target price of Rs 85.
HCL Technologie’s first-ever guidance on topline, and a reversion to issuing a margin band signifies its increasing confidence pertaining to near-term prospects. Reliance Securities are enthused with its leadership position in IMS, and while the business profile may be more skewed towards this segment, The brokerage house has ‘Buy’ rating on HCL Technologies with a target price of Rs 980.
Reliance Securities believes that Majesco will be a key beneficiary of untapped US P&C core software market (10-15 per cent 3rd party penetration), on account of highly-rated product portfolio, focus on Cloud, expanding strategic tie-ups and cross-selling opportunities with extant clients. The brokerage house initiates coverage on Majesco with a ‘Buy’ recommendation and target price of Rs 678.
J Kumar Infraprojects
With the Mumbai Metro Rail Corporation (MMRC) signing the contract for Mumbai Metro Line 3 project with J Kumar Infra (JKIL) among others, Edelweiss Securities believes the company is the best play on the burgeoning metro rail opportunity in India. The brokerage house envisages significant fillip to JKIL’s execution as the Line 3 project comprises around 50% of the company’s order book. It maintains ‘Buy’ rating with target price of Rs 400.
Religare Capital Markets said standalone EBITDA margins of Tata Motors were strong (6.7 per cent as against its estimated 6.3 per cent), even as higher depreciation and lower other income pulled down profits to Rs 100 crore. The brokerage house cuts estimates to build in the translation losses from GBP depreciation versus the INR, but maintains ‘Buy’ rating with revised target price of Rs 600 on expectations of continued volume momentum ahead.