Markets at 10-month high; Mahanagar Gas, Indraprastha Gas among 5 top picks

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Updated: July 1, 2016 1:28:12 PM

Shares of the country's second-largest CNG retailer Mahanagar Gas on July 1 made a strong debut at the bourses, surging over 28 per cent, against the issue price of Rs 421.

bse sensex nse nifty top stocks to buyDalal Street wiped off Brexit jitters this week. Consider this: In the past four trading session, the BSE Sensex surged 602 points to 26,999.72 till June 30 whereas the 30-share index tanked 604 points on June 24 when Britain decided to leave EU in a referendum. (Photo: Reuters)

Dalal Street wiped off Brexit jitters this week. Consider this: In the past four trading session, the BSE Sensex surged 602 points to 26,999.72 till June 30 whereas the 30-share index tanked 604 points on June 24 when Britain decided to leave EU in a referendum.

On July 1, benchmark indices hit 10-month highs and rallying for five consecutive trading session as investors built more bets amid continuous foreign inflows. Positive global cues also kept mood upbeat.

This week, Union Cabinet has approved the implementation of the recommendations of the 7th Central Pay Commission (CPC). Also reports over narrowing of monsoon deficit further gave direction to markets this week.

Read more: Equitas Holdings shares gain nearly 8% on small finance bank license

From here on, markets experts are looking bullish on the Indian equity markets. Sudip Bandyopadhyay, chairman of Inditrade Capital said, “I believe Nifty can touch the level of 9,100 by the end of ongoing calendar year.”

Ketan Karkhanis, Sr.VP and Head of Equity Relationship Service, ICICI Securities said, “We ascribe a multiple of 16.5x on the Sensex EPS of FY18E and assign a one year forward target of 30,000 for Sensex and 9,100 for Nifty.”

Here are 5 stocks which you can consider to add in your portfolio in the present bullish market scenario:

Mahanagar Gas (MGL)
Recommended By: Prabhudas Lilladher
Investment Rationale: Shares of the country’s second-largest CNG retailer Mahanagar Gas on July 1 made a strong debut at the bourses, surging over 28 per cent, against the issue price of Rs 421. According to Prabhudas Lilladher, MGL is poised to deliver 8.3 per cent CAGR earnings over FY16-18E supported by demand revival of 5 per cent. Secured gas supply (100 per cent domestic gas supply for CNG, PNG domestic) and favourable gas economics (32-58 per cent cheaper to diesel and petrol) will spur growth beyond regulated consumption in the medium term as gas outscores competing fuels linked to crude. The brokerage house initiate coverage of Mahanagar Gas with a ‘Buy’ rating.

Aditya Birla Nuvo
Recommended By: Sharekhan
Investment Rationale: Aditya Birla Nuvo has appreciated by 46 per cent over the last three months, with the stock spurting by 22 per cent in the last 45 days alone. Despite the strong rally in the stock, Sharekhan believes the company presents significant value on account of its strong position in the financial services vertical and re-rating potential. Therefore, the brokerage house maintains ‘Buy’ rating on the stock with a revised price target of Rs 1,435. Shares of Aditya Birla Nuvo were trading at Rs 1,219.90

KEC International
Recommended By: IDFC Securities
Investment Rationale: KEC, in a joint exercise with McKinsey for the past 20 months, has worked towards improving profitability. This has resulted in several operational improvements, predominantly in the T&D segment, such as timely execution (seven projects completed ahead of schedule), improved billing and collection process (improved working capital) etc. Further, such operational improvements have been extended to other divisions (railways, cables, etc.), wherein margins are lower than overall margins of the company. Accordingly, KEC has guided for margin expansion to over 8.5 per cent in FY17E (over 50 basis points) and working capital improvement. IDFC believes the share price of the company can touch Rs 160.

Indraprastha Gas (IGL)
Recommended By: Prabhudas Lilladher
Investment Rationale: IGL remains a green play on rising pollution concerns and increased government measures to limit the impact of the same. Supported by continued discretionary conversion, regulatory push to convert to greener fuels and new bus addition in Delhi, Prabhudas Lilladher expect 16 per cent CAGR over FY16‐18E. The brokerage house has ‘Buy’ rating on IGL with target price of Rs 632. IGL was trading at Rs 619 in the afternoon trade on July 1.

Aditya Birla Fashion
Recommended By: JM Financial
Investment Rationale: The brokerage house believes increase in discretionary consumption will benefit shares like Aditya Birla Fashion. The scrip was at Rs 142.35 on June 30.

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