Led by rising concerns over China, weak corporate earnings, selling in global markets, soft rupee, disappointing macro-economic data and further downfall in crude oil price, the benchmark indices BSE Sensex and NSE Nifty fell to their lowest level in nearly 20 months. Some outflow by foreign institutional investors also weighed market sentiments in January so far this year.

Since the beginning of the new calendar year 2016, the BSE Sensex fell 6.37 per cent, or 1,662.50 points to 24,455.04 till January 15. The 50-share index, Nifty plunged 6.39 per cent, or 508.55 points, to 7,437.80 during the same period.

Among the sectoral indices, The BSE Capital Goods index fell the most — 12.22 per cent so far in January. It was followed by BSE Bankex (down 10.82 per cent), BSE Realty (down 9.48 per cent) and BSE Metal (down 8.87 per cent). Rest all other indices are also in red.

Going ahead more companies will report their quarterly results which will reflect the health of the domestic economy. Jayant Manglik, president, retail distribution, Religare Securities, said, “Markets are expected to remain under stress and volatility will remain high. We continue to maintain caution on smallcap and midcap indices. Traders are advised to avoid leveraged positions and stick to fundamentally strong companies. Investors should accumulate quality counters on every dip. One should look in auto, FMCG, IT and pharma space for investment.”

Below are the five stocks on which market experts are looking bullish in the present market scenario.

NIIT Technologies
Recommended By: Prabhudas Lilladher
Target Price: Rs 650
Investment Rationale: NIIT Technologies Q3FY16 revenue was expectation However, there was a strong beat on margins and EPS front. Revenues were soft due to seasonality and completion of projects in travel and transportation vertical. Company expects revenue growth to recover from Q1FY17, led by ramp up of deals. Management has guided for FY16 revenue at lower end of industry average and expects to grow at industry average in FY17. Company expects further margin improvement in Q4FY16 and YoY margin improvement in FY17, driven largely by better business mix. A strong order intake of $123m (+54% QoQ) was a positive. Brokerage house Prabhudas Lilladher expects further margin improvement in FY16 and revenue recovery in FY17. Return to industry growth can drive multiple expansion in FY17.

Mahindra & Mahindra
Recommended By: Prabhudas Lilladher
Target Price: Rs 1,418
Investment Rationale: The KUV100 marks dual initiatives for M&M – an entry into the high volume smaller vehicle segment, as well as offering the option of a petrol engine. Prabhudas Lilladher expects the KUV100 to be an important product for M&M as it caters to a new segment where M&M did not have a presence previously. With new launches in the UV segment and with a lower base, the brokerage house expects M&M’s automotive division to report better growth in H2. FY17 should mark a better performance from both automotive and FES segments. The brokerage house believes the share price of M&M can touch Rs 1,418 in the next few quarters.

Infosys
Recommended By: Reliance Securities
Target Price: Rs 1,300
Investment Rationale: Reliance Securities maintains its FY17E/18E estimates on increased revenue acceleration and moderation of margin estimates, supported by higher growth visibility on improved TCV trend, strong volume-led growth, automation mitigating pricing pressure and on strong deal pipeline. The brokerage house see Infy’s dollar revenue and EPS to grow at 12 per cent and 10 per cent, respectively, over FY15-18E CAGR.

Zee Entertainment (ZEEL)
Recommended By: Sharekhan
Target Price: Rs 470
Investment Rationale: For Q3FY2016, Zee Entertainment Enterprises revenue growth was ahead of estimates with 17 per cent year-on-year growth to Rs 1,595.1 crore, aided by 26.8 per cent growth in ads revenue and 17 per cent growth in the subscriptions revenue. ZEEL continues to outperform the broadcasting advertising market and expects to continue the momentum with improvement in the macro economy. The management indicated that the strong momentum will continue in the ads revenue growth led by market share gains and improvement in spending from segments like FMCG, e-commerce, consumer durables, telcom and auto. Also, subscriptions revenue will see benefits from the run-up phase III and IV digitisation process (more visible in FY2017 and FY2018). Sharekhan has broadly maintained its earnings estimates for FY2016, FY2017 and FY2018 and sees ZEEL as the prime beneficiary of macro revival and digitisation.

Bharti Airtel
Recommended By: JM Financial
Target Price: Rs 400
Investment Rationale: Bharti recently announced that Orange SA of France has agreed to acquire 100 per cent of its subsidiaries in Burkina Faso and Sierra Leone, at an EV of 7.9x FY16E EBITDA. This is a positive surprise, as JM Financial have valued overall Airtel Africa at 5.5x trailing EV/EBITDA (equal to a 5.0x forward or FY17E multiple). The brokerage house sees four key benefits of a complete Africa exit: (1) Value unlocking potential driven by higher transaction or sale multiples; (2) Balance sheet deleveraging; (3) Cash burn elimination; and most significantly (4) Potential re-rating of core India business. According to JM Financial, an exit from Africa could add Rs50 per share to our target price, assuming: (1) Transaction multiple of 6.0x forward EV/EBITDA, and: (2) India (ex-Towers) gets subsequently re-rated to a 6.5x forward multiple from 6.0x in our TP.

(Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online.)