Macroeconomic data, corporate earning, global market cues, FPIs investment, movement of rupee against the dollar and crude oil prices will dictate market trend in the near term.
The first week of the New Year 2016 not remained in favour of bulls as benchmark indices on domestic stock exchanges fell over 4.5 per cent per cent during the period. The BSE Sensex tanked 1,226.57 points, or 4.68 per cent, to 24,934.33 on January 8 from 26,160.90 on January 1. Similarly, the 50-share index, NSE Nifty shed 361.85 point to 7,601.35 on January 8 from 7963.20 on January 1.
The BSE Sensex on Monday closed 109.29 points down at 24,825.04 as jitters over China continued.
According to market experts, equity market saw selling pressure as China fuelled fears about its economy by allowing the yuan to weaken further, and also a nuclear test by North Korea added to a growing list of political worries. Selling by foreign institutional investors also dampened market mood last week.
The World Bank on Wednesday also cut its global growth forecasts for this year and 2017, citing concerns over China’s economy and its impact on commodities.
From here onwards, macroeconomic data, corporate earnings, trend in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), movement of rupee against the dollar and crude oil price will dictate market trend in the near term.
Below are five stocks that could be a good buy to beat the stock markets volatility:
Recommended By: Ambit Capital
Why Buy: In order to deliver consistent outperformance, Asian Paints has relied on quality professionals, proactive use of technology, effective functioning of its Board and strong dealer relationships. These factors are likely to result in further market share gains in paints; successful expansion into adjacent categories; and dominance through the next phase of industry evolution. Ambit Capital expects revenue/EPS CAGR of 17 per cent/ 23 per cent over FY15-FY20. Factoring in the longevity of these growth rates, the brokerage house arrived at a DCF-based (discounted cash flow) fair value of Rs 986.
Recommended By: SMC Investment and Advisors
Why Buy: Inox Leisure is in an expansion mode and well placed to gain from successful movie releases. It has plans to expand to 110 properties with 620 screens and 1.5 lakh seats. Thus, it is expected the stock will see a price target of Rs 284 in 8 to 10 months time frame on an expected P/E of 25.85 times and FY17(E) earnings of 10.98.
The company is one of India’s largest multiplex operators engaged in the business of film exhibition and operating and managing multiplexes. Through a mix of organic and inorganic expansion, it has emerged as the second largest multiplex player in India, with a 23 per cent share in multiplex screens.
Recommended By: SMC Investment and Advisors
Why Buy: Mandhana Industries is one of India’s leading textile and garment manufacturers. According to SMC, the retail story is ready to bloom with a strong growth in topline and the margins. The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players into the Indian market. Thus, it is expected that the stock will see a target price of Rs 383 in 8 to 10 months.
Recommended By: Prabhudas Lilladher
Why Buy: FMCG sector is likely to benefit from margin expansion due to low commodity prices, though volume growth remains far from convincing. Prabhudas Lilladher continues to maintain GSK Consumer as one of the top picks purely on valuations.
Recommended By: Nomura
Why Buy: Tata Power is India’s largest integrated power utility with an expanding overseas footprint, which notably includes a 30 per cent stake in Bumi’s KPC/Arutmin coal assets. Its ‘net long’ position on INA thermal coal and fuel cost under-recovery at Mundra UMPP have led to a drop in normalised RoE from 9.3 per cent in FY12 to 1.7 per cent in FY15. According to Nomura, RoE will recover to 10 per cent in FY17F/18F as Mundra UMPP turns profitable, distribution business cash flows (Delhi & Mumbai) improve, EBIT spread in the coal business bottoms out, and 1GW incremental capacity starts contributing to EBITDA. The brokerage house believe the share price of the company can touch Rs 85 in the next 12 months.
Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online.