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Last Updated : Jul 26, 2017 08:37 AM IST | Source: Moneycontrol.com

Nifty to hit 10,500 by Dec 2017! Top 10 stocks to buy when market trades at record highs

Investors should wait for initiating fresh long positions at current levels and re-enter on dips. Most analysts do not rule out a dip of 2-3-4 percent from current levels

Kshitij Anand @kshanand
 
 
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The Nifty hit a record high of 10,000 for the first time in history on Tuesday, but looking at analyst estimates for the index, 10K just look like another number. Most analysts on D-Street expects the index to rally up to 10,500-11,000 levels by December 2017.

The journey will not be as smooth which we saw so far in 2017 but some more consolidation cannot be ruled out, suggest experts but the broader trend looks intact which is still on the upside.

Investors should wait for initiating fresh long positions at current levels and re-enter on dips. Most analysts do not rule out a dip of 2-3-4 percent from current levels. But, considering the fact that liquidity remains strong, most dips will be bought into.

“We have been maintaining the bullish stance on the Indian markets for long now and expect the rally to continue over improving economic data,” Vaibhav Agrawal- Head of Research and ARQ, Angel Broking told Moneycontrol.

“We believe that markets can scale new heights with strong inflows, continued reforms and strong optimism in investors and consumers. We believe that 10,500 is a very much achievable level by end of the year,” he said.

For the first time this year, the market looks overbought technically and hence could shed some weight in the near term, suggest experts. If this happens it would be a healthy outcome for more investors would be able to participate who were not able to invest in the runaway market.

"Over the medium-term we see the Indian market scaling greater heights and testing the 11,000 mark and hence investors are advised to stay put and add to positions on dips of 3-5 percent,” Gautam Shah, CMT Associate Director, Chief Technical Analyst- JM Financial Services Ltd told Moneycontrol.

“The Metals and Auto sectors are likely to see continuing strength while IT and Pharma could end their long period of underperformance,” he said.

We have collated a list of ten stocks with fair valuations from different experts which still look attractive at current levels:

Analyst: Vaibhav Agrawal- Head of Research and ARQ, Angel Broking

Maruti Suzuki:

Maruti Suzuki is India's largest PV maker with about 50 percent market share. The Company has been seeing a good improvement in its EBITDA margins and return on equity (ROE) levels.

With the premium category vehicles seeing a sustained demand, we expect the product mix further favouring margins and ROE. The stock can be bought with the price target of Rs8,500.

Alkem Laboratories:

Shares of Alkem has remained out of favor over last few months despite the company getting EIR on its facilities. The company derives 2/3rd its revenues from the domestic operations while rest comes from the Exports, mainly the US.

The Company is expected to see a faster ramp up in its US revenues which is likely to double over next two to three years. The stock is currently trading at 18x of its FY19 earnings and we believe that it can yield about 15 percent return over next one year.

Federal Bank:

Strong capital adequacy will ensure healthy advances growth, improving asset quality with stable margins will lead to higher than industry bottom line growth. This together with attractive valuations makes the Federal bank a good investment opportunity.

Music Broadcast :

The stock operates in the attractive industry with long term growth drivers and less risk of new entrants. The company is likely to see improvement in margins and together with no incremental capex requirement, we expect the company is likely to witness strong free cash flow generation.

We believe that company is likely to pay good dividends going ahead. In our opinion, this stock can be a good investment opportunity at the current valuation.

Syngene International:

This is a unique opportunity to invest in the innovative drug research. Syngene has been maintaining a track record of strong growth for many years. Last year, due to the fire incident at its one of the facility, growth took some beating however with the addition of newly dedicated centers, company is likely to see strong growth over next two years.

The addition of new capacity in the biologic segment is also expected to give much-required headroom for growth. We are bullish on this stock with price target of Rs 560.

Analyst: Sanjeev Zarbade, Vice President – PCG Research, Kotak Securities

DB Corp:

DB Corp is one of the largest newsprint companies in India and is barely a quarter away from entering its “election supercycle” which we believe shall have a significant impact on earnings revisions, as well as valuations.

We continue to see a high likelihood of significant gains in DB Corp. While our investment thesis has not begun to play out, we believe we are now entering a phase of strong growth in advertising revenues, and a period of relative calm/ favourable base in other categories.

Tata Motors:

The company has charted a long-term plan for improving its performance in the domestic passenger vehicle and commercial vehicle segment. Plus, given strong product pipeline, JLR’s volume outlook remains positive.

Petronet LNG:

With the completion of Dahej RLNG expansion, the capacity has increased by 50 percent to 15 mmtpa. Full 15 mmtpa capacity is booked, giving decent revenue visibility.

We expect spot LNG prices to remain lower in the near term. We expect LNG consumption to rise in India as the government has cut customs duty on LNG to 2.5 percent. Additionally, there is a strong possibility of a ban on furnace oil and petroleum coke in NCR, resulting in incremental demand on LNG.

Shipping Corporation:

Shipping markets have become stable and expected to improve going forward which should boost the revenues and earnings of the company.

The balance sheet health of the company has also improved over the last two years with debt prepayment and is expected to improve further going forward.

Strategic sale by government is expected to remove government bound constraints and improve management of SCI which should add value to the company

Balmer Lawrie:

It is an over 150-year old PSU company with rich real estate spread over 30 facilities, mostly in cities. It has maintained an impressive track record of dividends.

The logistic business posted impressive performance in the last quarter and accounts for nearly 50 percent of total company profits.

Travel division made a substantial turnaround in profitability in FY2017 by acquiring a small private travel business - segment profit jumped over 45 percent on a YoY basis.

The company has a strong balance sheet with net cash of over Rs.5 billion which is 1/5th of its market cap.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

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First Published on Jul 26, 2017 08:37 am
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