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Last Updated : Apr 14, 2019 08:16 AM IST | Source: Moneycontrol.com

Here’s why Bosch, Ashok Leyland and Godrej Consumer are ripe for cherry picking

The gap between the broader markets and frontline Nifty stocks will soon lessen as the bull market resume when the small and midcap stocks will begin their upwards journey.

Kshitij Anand @kshanand
 
 
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The gap between the broader markets and frontline Nifty stocks will soon lessen as the bull market resume when the small and midcap stocks will begin their upwards journey, Umesh Mehta, Head of Research, SAMCO Securities, said in an interview with Moneycontrol’s Kshitij Anand.

Q) We witnessed consolidation in the week gone by. The Nifty moved in a range of 11,550-11,700 levels? What is capping upside for markets and what are the crucial levels which one should keep in mind for the coming week?

A) After Nifty’s massive pre-poll rally from levels of 10,598 to 11,761, the market has been consolidating in a narrow range and is likely to remain rangebound at least till the mid of May.

It is the fear of the unknown in the form of an unexpected election outcome which is capping the upside for the markets. The Indian bourses are brewing with speculation but until the results are out there will be some hesitation which will cloud the markets.

Level of 11,550 levels will prove to be a strong support level which if breached can take the markets lower and on the upside if Nifty crosses 11,750 then there are chances for the market to attain new highs and levels which have been unattained before.

Q) What are charts suggesting for Nifty Bank?

A) Since October 2018, Bank Nifty has been on the rise and has witnessed a massive comeback. However, currently, the charts suggest a consolidation phase for this index which is trying to give a breakout.

But, breakouts after small consolidations can only be seen as false breakouts and breakouts after longer consolidations are safe to get into this index.

Q) Although Nifty is trading near its record highs there were more number of stocks which hit 52-week lows compared to stocks which hit fresh 52-week highs?

A) The year 2018 saw some relentless selling in small and midcap stocks whereas frontline Nifty stocks were far more resilient. Therefore, when Nifty is trading near its record high levels, very few stocks are expected to be near 52-week highs and the majority of the stocks are way below near the 52-week lows.

The gap between the broader markets and frontline Nifty stocks will soon lessen as the bull market resume when the small and midcap stocks will begin their upwards journey.

Q) Any 3-5 stocks which you think have made a bottom and ripe for cherry picking?

A) Bosch:

Bosch had fallen from highs of 24,900 and is now available at good valuations. It has enough margin of safety and given the international pedigree, focus on electric vehicles and growth in the previous quarters this stock looks like a safe bet for investors and traders to get their hands on.

Ashok Leyland:

Ashok Leyland is also attractively priced at the current moment and is ripe for a rally. Given the company's market leadership position in the high tonnage segment, it is best-placed and will benefit from the high tonnage vehicle demand due to the change in axle norms.

Additionally, there can be a volume boost in FY20 due to pre-buying ahead of BSVI norms which will aid the topline.

Godrej Consumer:

Godrej Consumer is one consumption play which has been a consistent performer in the past and has a healthy dividend payout. With a double-digit ROE and approx.

The stock is a good bet in the FMCG sector as it recorded 21 percent operating margin. As Godrej Consumer has been beaten down a lot, it is all set to bounce-back, hence investors must start accumulating it.

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 Apr 14, 2019 08:16 am
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