Rising Indo-Pak tension; Stay calm and invest in these stocks for better returns

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New Delhi | Updated: September 30, 2016 12:16:02 PM

Investors panicked and took to selling on Thursday after the government announced that it has carried out surgical strikes on the terror camps in PoK.

BSE Sensex, NSE NiftyInvestors panicked and took to selling on Thursday after the government announced that it has carried out surgical strikes on the terror camps in PoK.

Investors panicked and took to selling on Thursday after the government announced that it has carried out surgical strikes on the terror camps in PoK. As an aftereffect to this non-economic event, Rs 2.40 lakh crore of investors wealth was wiped off on BSE on Thursday with the benchmark Sensex plunging over 1.5 per cent during the day. The attack was a response to the continuous terrorist activities carried out by Pakistan, including the recent attack on military camp at Uri.

On the fall in equity markets, SBI in a report ‘Ecowrap’ said, “We believe such attacks are unlikely to have any material impact on the markets. Indian economy is currently on a sound footing with favourable macro numbers.” Historical data shows that at the time of Kargil War Indian market stayed robust during May-July 1999. During the three-month period, the benchmark BSE Sensex soared 1,163.94 points, or 34.45 per cent to 4,542.34 on July 30, 2009 against 3,378.40 on May 3, while NSE Nifty 50 index surged 35 per cent, or 339.40 points, to 1310.15 from 970.75 during the same period. The overall impact of the Kargil war was actually positive. The economy grew at the same pace in 1999-2000 as the year before – a healthy 6.5 per cent.

Now the market is eyeing RBI’s monetary policy review on October 4 along with rising tension between India and Pakistan and financial results for the second quarter ending September 2016. On the present market conditions, Kunj Bansal, ED and CIO, Centrum Wealth Management said, “We can witness some kind of consolidation in the market before it takes a fresh direction.” On Friday, the BSE Sensex was trading 43 points down at 27784.36 in the late morning trade.

Below are 3 stocks on which brokerage houses are looking bullish in the present market scenario:

1) Indraprastha Gas Limited (IGL): Prabhudas Lilladher is bullish on IGL shares with a target price of Rs 1,080. According to the brokerage house, increased cars or taxis conversion and new bus addition in Delhi will drive 30 per cent CAGR over FY16-18E. Prabudas Lilladher has increased FY17/18E earnings by 7 per cent/9 per cent to build in higher margins and volumes. The scrip was at Rs 768.35 on Thursday.

2) PNC Infratech: PNC Infratech is an infrastructure construction, development and management company having expertise in execution of projects including highways, bridges, flyovers, airport runways, industrial areas and transmission lines. Brokerage firm Geojit BNP Paribas Financial Services has ‘Buy’ rating on the shares of PNC Infratech with a target price of Rs 142.
It said, “Strong order book of Rs 5,101 crore provides strong revenue visibility for next 2-3years. The continued progress in awarding new road projects by NHAI and states will be major trigger for PNC to build their order book. Strong execution stimulated revenue by a CAGR of 12 per cent over FY11-16 and improved EBITDA margin by 200 basis points to 13.2 per cent in FY16. We expect revenue and PBT CAGR of 22 per cent and 27 per cent over FY16-18E.” Shares of the company closed at Rs 113 on Thursday.

3) Bharat Electronics: Uptick in defence capex by government when coupled with BEL’s strong market positioning, indicate that good times are ahead for Bharat Electronics, according to Angel Broking. The brokerage house is positive on Bharat Electronics with a target price of Rs 1,414. On Thursday, the scrip was trading at Rs 1,234.

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