Sumit Bilgaiyan of Equity99 said the only risk market bears going forward is repel effects from US & UK markets.
In the past couple of days, the Nifty has broken its gaining streak impacted by increasing price of commodities & changes in the financial policies of FIIs. In coming couple of quarters, we foresee Nifty heading towards 11,800-12,000 levels," Sumit Bilgaiyan, Founder, Equity99 told Moneycontrol's Sunil Shankar Matkar.
The Indian economy has been growing over 7 percent. Is it sustainable and do you expect GDP growth to hit the 8 percent mark soon?
India’s current account deficit has widened, oil prices have been volatile and the rupee has dropped to all-time lows. The external environment has been challenging for India since the beginning of this financial year. In contrast to this backdrop, the GDP growth numbers (8.2 percent) for the first quarter brought some good news.
Government spending has been accommodative, which should bode well for the services sector. We expect the GDP growth print to come in at 7.5 percent in FY19.
The dollar-rupee pair are at record lows while crude oil prices have started to inch up again. Where do you see the same headed?
Going ahead, in the year due to issues plaguing Nigeria and Libya and an above average expectation of temperature levels (warmer) Northern Hemisphere will lead to oil price stabilising in the range of USD 71-76 a barrel.
Prima Facie, US economy is seen to be strengthening in the short run, in medium term, the economy indicators will provide a better picture. Till then, a steep appreciation in rupee from current levels is hard to expect. The rupee may stabilise in comfortable range of 71-73 to the dollar.
Do you see the Nifty heading to 11,800-12,000 levels or is the market overvalued at present?
Foreign institutional investors (FIIs) participated in the rally by taking fresh long positions in index futures in the month gone by. We can easily sense that decent amount of long positions formed in Nifty in the last two months are still intact in the system. Till the time we don't see any significant change in derivative data, we would like to maintain our positive stance on market.
Last couple of days, Nifty broke its gaining streak, impacted by increasing price of the commodities & changes in the financial policies of FIIs. These shocks bear temporary effects. In coming couple of quarters, we foresee Nifty heading to 11,800-12,000 levels.
Do you expect more populist measures like farm loan waivers ahead of state and general elections?
Going forward, small populist measures are expected from the government before general elections, but owing to a major spend on the Ayushman Bharat Scheme, the government might not go for a major populist major involving very large sum.
Going forward, which sectors will be in focus over the next 1 year?
Should watch out for sectors like IT and pharma in the next one year. It could reap the sheer benefits of devalued rupee, while pharma has undergone a downturn for past 3 years and is expected to recover. Sectors like power, steel, Infra, cement and real estate are expected to do well owing to pickup in the infra spending and several development schemes announced by government.
What are your top five bets for next 1 year?
BHEL: Buy | Target: Rs 115 | Return: 45%
BHEL posted stellar performance in Q1FY19. BHEL has a total order book of Rs 117,000 crore by end of Q1FY19.
It has formed small inverted head and shoulder pattern on the daily chart which is bullish in its nature. On the back of this improved performance and technical structure, we are recommending a buy with target of Rs 115.
PFC: Buy | Target: Rs 120 | Return: 38%
The company will remain focused towards the renewable sector due to the commissioning period in these loans is lower and the average yields are 50-100bps lower too. Admittedly, contribution to loan book is still small.
Given that large part of stress pertains to state utilities, where recovery is just a matter of time we believe stock is available at a throw away price. It is trading at below band of its historic P/B value band. We are recommending a buy with a target of Rs 120.
IOL Chemical: Buy | Target: Rs 250 | Return: 101%
Company's strong performance sustains in Q1FY19, so we are maintaining our buy call with revised price target of Rs 250.
Revenues grew 68 percent YoY to Rs 362 crore mainly due to higher demand of its flagship product Ibuprofen. Profit grew 383.55 percent to Rs 14.41 crore from Rs 2.98 crore, which is above our expectation.
Adani Enterprises: Buy | Target: Rs 300 | Return: 91%
Adani Enterprises (AEL) business portfolio comprises coal trading and mining, agri-storage infrastructure and services as well as edible oil and gas distribution.
Adani Group Chairman Gautam Adani commented, "We will continue to thrust on diverse national critical business spaces like mining, gas distribution, agro businesses, solar manufacturing and ancillary industries."
We are positive in Adani’s story and recommendation with a price target of Rs 300
Parag Milk Foods: Buy | Target: Rs 400 | Return: 36%
The company has posted a quite healthy growth in Q1FY19. Its profit zoomed 168 percent.
The firm recently launched Avvatar Advance Muscle Gainer. It has also launched mishti doi under the Gowardhan brand. The firm has acquired newly plant at Sonipat which will help company to enter in North India’s market.
Stock is trading at a PE ratio of 24.7x which is lower against peers. We are recommending a Buy for target of Rs 400.Disclaimer: The author is Founder of Equity99. 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.