Sumit Bilgaiyan
Everybody earned good money from the stock market in 2017 but calendar year 2018 was a difficult year for stock market participants. Though Nifty and Sensex gave small positive returns, midcap and smallcap were underperformers. Most of midcap and small cap stocks tanked 30-60 percent from their peaks of 2018.
Now we are entering in a new year with new hopes. 2019 will be a very important year because we will get a new government in May 2019. The market will react aggressively on election result outcome but we are quite confident for midcap and smallcap rally in the first half of 2019.
Most of the cash stocks are available below their 5-year’s valuation. From this list, fundamentally sound stocks will perform in next 3-4 months in a pre-election rally. Nifty can dance with global markets but we strongly feel stock-specific pre-election rally will be seen in the first half of 2019.
For the next week, Nifty has strong support around 10,800-10,745 and resistance around 10,965-11,090.
Here are three stock recommendation for medium to long-term:
Acknit Industries manufactures and sells industrial safety gloves and garments in India and international markets. Over 90 percent of its productions are exported to European countries.
The company generates power through windmills also. The company is delivering robust financial performance for a long time and it has posted fantastic numbers for Q2FY19 also. For Q2FY19, its PAT grew by 68 percent to Rs 0.91 crore on higher sales of Rs 39.45 crore.
During H1FY19, its PAT soared by 106 percent to Rs 2.10 crore on sales of Rs 73.78 crore. On very small share capital of Rs 3.04 crore, company has huge reserves of Rs 40.38 crore. The stock is trading at a P/E ratio of just 9.5x on its TTM EPS.
Acknit’s share book value works out to Rs 135.93. With strong Q2 numbers, we are quite bullish on this stock. The stock has formed bullish candlestick pattern on the daily chart with very good volume cluster and momentum oscillators like MACD, Stochastic, RSI also entering in buy mode.
We are recommending a strong buy for short-term trading and long-term investment.
Glenmark Pharmaceuticals (GPL) is a research-driven, global, integrated pharmaceutical organisation. It has 16 manufacturing facilities across five countries and has six R&D centres. Its generics business services the requirements of the US and Western European markets and the API business sells its products in over 80 countries, including the US, various countries in the EU, South America and India.
The company posted good numbers for Q2FY19. Its net profit increased 93.32 percent to Rs 414 crore from Rs 214.12 crore YoY on 14.23 percent higher sales of Rs 2,539.86 crore. EBITDA grew 13.3 percent in Q2FY19 to Rs 440.11 crore. It’s PAT increased 18.17 percent to Rs 646.99 crore in H1FY19. FIIs and DIIs have increased their stake during Q2FY19.
We recommend buying in a staggered manner for medium to long term.
Reliance Capital is cheapest but highly underperforming stock in the NBFC sector.
Apart from the asset management business, the company has presence in commercial finance, home finance, general insurance, life insurance and broking and distribution business through its subsidiaries. It has posted turn around numbers in Q2FY19. It has reported PAT of Rs 280 crore against a loss of Rs 163 crore during Q2FY19 on 10 percent higher income of Rs 5,330 crore.
Rcap trades at a PE ratio of less than 5x. The dividend yield is around 5 percent and it is trading at 0.34x price to book value at CMP. The Total AUM stands at Rs 90,128 crore as on September 30, 2018. We recommend buying in a staggered manner for medium to long term.
The author is Founder, Equity99.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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