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Last Updated : Feb 17, 2019 01:16 PM IST | Source: Moneycontrol.com

'Before elections, go for bottom fishing with capital protection approach'

It is time to apply bottom fishing strategy with capital protection approach. One should invest in 4-5 parts till election results are announced.

Moneycontrol Contributor
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Todays L/H

Sumit Bilgaiyan

Amid volatile crude oil, election environment and the backdrop of FII as net sellers, Indian equity market is seeing the most nervous time. The fierce sell off that continues in midcap and smallcap looks frightening at this stage. Around 80-85 percent stocks fell 30 to 75 percent from their recent highs and portfolio of investors are also 50 percent down while Nifty is trading at the same range with help of few stocks.

We strongly believe that this is the time when we think about our capital protection but history tells us differently. Historical data suggest that those who bought quality shares in 6 months period before election results were announced got huge profit in next one year. So this is the time when you should apply bottom fishing strategy with capital protection approach. One should invest in 4-5 parts till election results' are announced.


Nifty has strong support at 10,620-10,535 levels and resistance at 10,815-10,940 levels.

Here are the top stock trading ideas which can give good returns in the near term:

IOL Chemicals & Pharmaceuticals

IOL Chemicals is the world’s largest manufacturer of IBUPROFEN (capacity of 10,000 TPA against global demand of 35,000 TPA and global supply of around 28,000 TPA) and the second largest manufacturer of IBUPROFEN’s raw material ISO Butyl Benzene (IBB). It is the world’s only backward integrated IBUPROFEN manufacturer company. It is also manufacturing Ethyl Acetate, MCA and Acetyl Chloride in the chemical segment and manufacturing Metformin Hydrochloride (Anti Diabetic), Lamotrigine Fenofibrate (Anti Convulsant), Clopidogrel Bi Sulphate (Anti Platelet) & Fenofibrate (Anti cholesterol) in pharmaceutical segment.

The company has announced bumper numbers for Q3FY19 and 9MFY19. During Q3FY19, its sales grew by 82 percent YoY to Rs.478 crore, EBITDA grew 316 percent to Rs 136.36 crore while PAT increased by 835 percent to Rs 82.24 crore. During 9MFY19, its sales grew 77 percent to Rs 1,263.04 crore, EBITDA grew 188 percent to Rs 260.68 crore while PAT increased 733 percent to Rs 135.05 crore.

At CMP, the stock trades at a PE ratio of just 7.5X. We had first recommended this stock at Rs 95 and still we are bullish on this stock. We are recommending a strong buy for medium to long term.

PI Industries

Incorporated in 1947, PI Industries focuses on complex chemistry solutions in agrisciences. With the strength of over 2,000 employees, PI Industries currently operates a strong infrastructure set-up consisting 3 formulation facilities as well as 8 multi-product plants under its 3 manufacturing locations.

It has reported excellent results for Q3FY19. Its sales and EBITDA grew by 32 percent YoY and 42 percent YoY, respectively, while its PAT grew 33 percent to Rs 107 crore as against Rs 81 crore. During 9MFY19, its PAT grew 8 percent to Rs 283 crore on 23 percent higher sales of Rs 2036 crore. During 9MFY19, EBITDA grew 12 percent to Rs 401 crore as against Rs 357 crore. PI Industries trades at PE ratio of 31x.

The company expects its exports will be driven by higher momentum from ramp up in existing products and new introductions. We are recommending a buy in a staggered manner for medium to long term.

AIA Engineering

AIA Engineering Limited (AIA) is one of the global leaders in manufacturing value-added, impact abrasion and corrosion resistant High Chrome Mill Internals (HCMI). Group has a global customer footprint and directly serves an ever-expanding customer base in over 125 countries panning all continents of the world.

It has reported strong results for Q3FY19. Its sales and PBDIT grew by 25.85 percent YoY and 30.24 percent YoY, respectively, while its PAT grew 11.02 percent to Rs 128.96 crore as against Rs 116.15 crore. During 9MFY19, its PAT grew 21.94 percent to Rs 355.05 crore on 25.7 percent higher sales of Rs 2106.43 crore. During 9MFY19, PDBIT grew 26.96 percent to Rs 468.62 crore as against Rs 369.12 crore.

FIIs hold 21.59 percent and mutual funds hold 13.84 percent stake in this company. AIA trades at PE ratio of 32.5X. We are recommending a buy in a staggered manner for medium to long term.

The author is Founder of Equity99

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Feb 17, 2019 01:12 pm