With India unlocking its cities strategically as it aims to steer towards economic recovery alongside the monstrous task of flattening the infection rate of coronavirus pandemic, consumption is steadily climbing back to pre-coronavirus levels.
With India unlocking its cities strategically as it aims to steer towards economic recovery alongside the monstrous task of flattening the infection rate of coronavirus pandemic, consumption is steadily climbing back to pre-coronavirus levels. This has thrown an opportunity in the stock market to bet on consumption stocks with good fundamentals, helping them to ride on the economic recovery wave. ICICI Direct, in a research report has listed down two shares, terming that gladiator stocks with an upside of as much as 17% in the next six months. The brokerage firm’s recommendations are two large companies that have helped investors pocket attractive gains in the last three years.
Asian Paints | BUY
Target price: Rs 2020 (16% upside)
The paint industry, in general, is staring down an uninviting financial year 2021 with 100% revenue loss in the month of April. What is also expected to hit the sector is the discretionary nature of the paints industry, which will push the sector into a slowdown. However, as the demand recovers big players like Asian Paints will benefit first. “Asian paints, with its robust dealer network (~60,000 +) and strong supply chain is well placed among competitors to recoup the lost sales in the coming future,”ICICI Direct said. Asian Paints share price has jumped 6% in the last 15 days.
On the technical side the share price logged a resolute breakout from symmetrical triangle pattern, indicating conclusion of secondary corrective phase, that augurs well for acceleration of upward momentum. Thereby offering fresh entry opportunities to ride the next leg of major up move, according to ICICI Direct. “The stock has been trading in a secular up trend. Key point to highlight over the past four years is that, on multiple occasions buying demand emerged in the vicinity of 52 weeks EMA coincided with a long term upward sloping trend line. In the current scenario, stock resolved out of the symmetrical triangle after staging a strong comeback from long term trend line coincided with 52 weeks EMA, indicating rejuvenated upward momentum,” it added.
Titan | BUY
Target price: Rs 1,185 (17% upside)
Often touted as Rakesh Jhunjhunwala’s favourite stock, Titan company has seen consumption drop with footfall going to zero as stores close across the country. With its flagship brand Tanishq, Titan is the market leader when it comes to India’s jewellery segment and also has presence in other consumer segments, such as watches and eyewear. “Titan has a comfortable liquidity position due to adequate banking limits and ability to issue commercial paper at attractive rates,” ICICI Direct said. The Tata group company’s management expects to be net cash positive by September 2020. Surging gold prices are also going to aid the company’s revenues.
On the charts, the share price is at the cusp of breakout from the rounding consolidation pattern of the last two months signalling the conclusion of a corrective trend, auguring well for structural turnaround, said ICICI Direct. “This move offers a fresh entry opportunity to ride the next leg of major up move,” they added.