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Last Updated : Mar 18, 2019 10:43 AM IST | Source: Moneycontrol.com

'Expect huge short covering in next 10 days, buy every decline'

For next week, Nifty has strong support at 11,365-11,255 and resistance at 11,525-11,650 range, says Sumit Bilgaiyan

Moneycontrol Contributor
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Todays L/H

Sumit Bilgaiyan

After a long time, we have seen fireworks in the Indian market. During the last week, Sensex rallied 1,353 points, Nifty rallied 391 points and Bank nifty rallied 1,620 points.

Foreign investors are back in action and have invested Rs 13,564.57 crore during February and Rs 19,131.07 crore in March so far. Last time foreign investors bought shares worth above Rs 10,000 crore in a month was in March 2017. After two years we are seeing this kind of money flow from foreign investors.


The financial year 2019 is about to finish and there are huge shorts in the market. So in the next 10 days, we are expecting huge short covering and NAV rally in the market, so one should use every decline for buying.

For next week, Nifty has strong support at 11,365-11,255 and resistance at 11,525-11,650 range.

Our past recommendations like ITD Cementation, Bajaj Electricals, PNC Infra, PSP Projects, Motherson Sumi, Godfrey Phillips, PI Industries, AIA Engineering, AstraZeneca Pharma, Bajaj Auto, Divis Lab, Axis Bank, etc have given fantastic returns in less than two months.

Here are three more picks for mid to long term:

Future Retail:

Future Retail serves customers in more than 409 cities across the country through over 15.9 million square feet of retail space. Its hypermarket and supermarket business is led by Big Bazaar, fbb, Food Bazaar, Easyday, Foodhall and Hypercity. The company operates more than 1,444 stores in over 409 cities across the country. During Q3, the company added 108 new stores.

The company has posted stable numbers for 9MFY19. During 9MFY19, its net profit increased 9.5 percent to Rs 529.65 crore from Rs 483.68 crore YoY on 7 percent higher sales of Rs 14,768.30 crore. During 9MFY19, its EBITDA grew 18 percent to Rs 760.57 crore. During Q3FY19, Big Bazaar has reported store sales growth of 10.1 percent.

The stock has given a technical positive break out on daily and weekly charts. We recommend buying in a staggered manner for medium to long term.

Super Crop Safe:

The agro-chemical sector is looking highly promising for long-term investment. UPL and PI Industries are already trading at an all-time high price. Now it’s time to grab quality small-cap agro-chemical stock that can give multi-fold returns in a longer run.

Super Crop Safe is R&D driven agro-chemical with focus on niche products. The company has successfully developed and commercialised high margin bio-products through its R&D. Such products are Super Gold, triNETRA and Artica that are getting quite a strong response from the market.

The company is aiming to launch 3-4 high margin, high demand products from its R&D every year, which will further strengthen its margin. The company is planning to make debut in nutraceutical segment for which they have already acquired HACCP, FSSAI, and GMP certifications. The company has completed one product “Spirulina” on nutraceutical front and rest of the products are in the R&D pipeline.

Its PAT has grown at 77 percent CAGR over the last four years and EBITDA has grown at 41 percent CAGR in the same period. For Q3FY19, its PAT soared 27 percent to Rs 1.45crore.

Last week promoters bought shares from open market. AT CMP, the stock is trading at PE of just 18x on its (TTM) EPS. We believe this stock can become multi-bagger in the long run. We recommend buying for long term investment prospective.

L&T Finance:

LTFH is a financial holding company offering a focused range of financial products and services across rural, housing and wholesale finance sectors, as well as mutual fund products and wealth management services, through its wholly-owned subsidiaries.

It has reported excellent results for Q3FY19. Its income has improved 27.55 percent YoY to Rs 3,243.99 crore while PAT increased 80.78 percent to Rs 579.93 crore as against Rs 320.8 crore. The overall loan book of the company is up 23 percent YoY to Rs 93,708 crore in Q2FY19.

The company has shown 64 percent growth in rural finance, 34 percent growth in housing finance and 5 percent growth in wholesale finance. Its AUM in MF business increased 15 percent to Rs 69,080 crore in Q3FY19. During 9MFY19, its PAT grew 72.59 percent to Rs 1,678.72 crore on 29 percent higher income of Rs 9,438.25 crore. It’s Gross Stage 3 declined to 6.74 percent in Q3FY19 from 10.4 percent in Q3FY18.

At CMP, the stock is trading at P/E of just 14x. We recommend buying in a staggered manner for medium to long term.

The author is the Founder of 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.
First Published on Mar 18, 2019 10:22 am