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Last Updated : Dec 20, 2019 01:02 PM IST | Source:

Midcaps on cusp of bull trend, ICICIdirect picks 7 stocks that can give 19-38% returns

The Nifty Midcap index is on the cusp of a breakout from a well-defined falling channel encompassing the past two years' price action, which will be a classic bull market signal, it says.

Moneycontrol Contributor @moneycontrolcom

Largecaps continued to outperform broader market indices in 2019, but technical setup suggests that midcaps are not far behind and may even be on the cusp of a new bull trend, ICICIdirect Research said in a report on December 19.

Domestic equity benchmarks scaled lifetime highs, and in the process, D-Street absorbed a host of domestic and global concerns, indicating robustness in price structure.


For many investors, though, it has been a mixed bag, as broader participation is still missing. “Our three-pronged approach reveals, a secular bull market is ahead of us, as midcaps are at the cusp of a new uptrend,” said the report.

Investors should align or construct their long-term portfolios to benefit from changing market dynamics with incremental weightage for quality midcaps, it said.

ICICIdirect Research prognosis for the Nifty is based on a projection from a two-year consolidation pattern implying a target of 14,000 that is concurrent with the bottom-up approach.

The two baskets of Nifty constituents--outperformer stocks and bargain buy stocks--command a total weight of 73 percent. “They are expected to generate returns in excess of 20% each, thus corroborating our bullish stance, derived from empirical studies,” the report said.

The Nifty Midcap index is on the cusp of a breakout from a well-defined falling channel encompassing past two years price action, which will be a classic bull market signal. Indian midcaps enjoy consistent positive correlation with global peers, with the latter being a lead indicator.

As US and European midcap indices are touching new life-time highs after two year hibernation, empirical evidence favours Indian midcaps following in their footprint

Market breadth, as measured by the percentage of stocks above the long-term 200-day moving average, has acted as a key determinant for forward returns.

ICICIdirect Research handpicks seven stocks that could give 19-38 percent returns in next 12 months. These are  State Bank of India, SBI Life Insurance, Hindalco, Godfrey Phillips, RPG Life Sciences, PNC Infratech, and Persistent Systems.


State Bank of India: Buy| Target Rs 405| Stop Loss: Rs 267


SBI Life Insurance Company: Buy| Target Rs 1180| Stop Loss: Rs 820



Hindalco: Buy| Target Rs 250| Stop Loss Rs 185


Godfrey Phillips: Buy| Target Rs 1,740| Stop Loss: Rs 990


RPG Life Sciences: Buy| Target Rs 410| Stop Loss: Rs 258


PNC Infratech: Buy| Target Rs 249|Stop Loss Rs 158


Persistent Systems: Buy| Target Rs 890| Stop Loss: Rs 545


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First Published on Dec 20, 2019 01:02 pm
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