The benchmark indices managed to stay afloat with the S&P BSE Sensex up by about 4 percent in the last six months of 2018 but the bigger carnage was seen in the small & midcap space.
The last six month might not have gone investors’ way, especially after the blockbuster returns seen in 2017. Benchmark indices managed to stay afloat with the Sensex up about 4 percent in the last six months of 2018 but the bigger carnage was seen in the small and midcap space.
If we look at the performers of the last six months, most wealth creators are from the midcap and largecap space. Top 10 stocks that rose 30-80 percent in 2018 despite global and domestic headwinds include: Indiabulls Ventures, Firstsource Solutions, V-Mart Retail, NIIT Technologies, Mindtree, Tech Mahindra, Larsen & Toubro Infotech, KPIT Technologies, Mphasis and Jubilant FoodWorks.
“Stocks which have returned over 50 percent are fundamentally still strong and the momentum in these stocks is expected to continue going forward,” Ritesh Ashar, Chief Strategy Officer at KIFS Trade Capital, said.
Analysts sound a note of caution for the rest of 2018. The Sensex, which was up about 4 percent in 2018, is still down about 3 percent from its all-time high of 36,443.98. The broader market, which created fortunes for many last year, has seen double-digit cuts in 2018. The BSE Midcap index slipped a little over 13 percent so far in 2018 and the BSE Smallcap index dropped nearly 17 percent in the same period.
Experts feel investors will be better off sticking to quality names in the large and midcap space but advise avoiding smallcaps for now.
"Volatility is likely to continue going forward and midcaps are vulnerable at current levels. They are likely to stay in that state for some more time, thanks to excess valuations, rising cost of capital and global tensions," Bharat Iyer, MD, JP Morgan, told CNBC-TV18.
He advises investors to pare down their expectations from the market in the next 2 years. “A 10-12 percent return will be good for equity investors amid headwinds related to rising cost of capital both locally and globally.”So, which midcaps can investors buy now?
Iyer said investors should look at quality names in the midcap space. “We feel earnings are going to compound by over 15-20 percent in 2-3 years. Any correction in those stocks could be used as a buying opportunity.”
Here is a list of top 10 stocks in the BSE 500 index that rose 30-80 percent in the first six months of 2018.
We have collated views from different brokerage firms for the next 6-12 months
Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in
Indiabulls Venture: Hold| Stop Loss: Rs 450| Target: Rs 544
Most of the up move in the counter occurred in the month of April from the lows of Rs 244 to a high of Rs 544 in just 1 month. Since then, it is in a consolidation mode, and unless it breaks out above Rs 511 a fresh leg of up move can’t be expected. At best it is a 'hold' with a stop below 450 on a closing basis for an initial target of 544.
Firstsource Solutions: Hold| Stop Loss: Rs 67| Target: Rs 93
Recently, this counter registered a breakout above its multi-year consolidation range starting from Rs 50 – 25 kind of levels and since then it has rallied to meet its pattern targets.
At this juncture, for long-term investors, it can be a hold with a stop below 67 on a closing basis. For a bigger up move, this counter needs to register a sustainable breakout above Rs 84. In such a scenario it can be expected to test its all-time highs placed around Rs 93.
NIIT Technologies: Buy| Target: Rs 1,192| Stop Loss: Rs 1,047
This counter appears to be consolidating in a band of Rs 1,140 – 972 after registering a lifetime high of Rs 1,192 in April. However, 50-Days EMA it is offering support to the stocks on corrections.
Hence, as long as it sustains above the said average, investors can look for new lifetime highs with initial targets of 1192. Even fresh buying can be considered by short-term traders with a stop below Rs 1,047 on a closing basis.
Analyst: Jayant Manglik, President, Religare Broking Ltd.
V-Mart Retail: Buy| Target: Rs 2760| Stop Loss: Rs 2300
Despite volatility in the index, V-Mart has continuously maintained its upside momentum. Further, at the current juncture, the chart still looks strong and has the potential to make a new record high. One can take fresh longs at the current levels with a stop loss below Rs 2,300. On the upside, the stock is expected to face resistance around Rs 2,760.
MindTree Ltd: Buy| Target: Rs 1,100| Stop Loss: Rs 900
After witnessing a strong rally from Rs 450 to Rs 1,100 levels, currently, MindTree has been witnessing some profit taking. We believe after such a bull run, such correction is always a healthy sign which offers fresh buying opportunities.
We feel fresh long positions can be initiated in the stock on every dip. A stop loss can be maintained around Rs 900 with the initial target of its recent high placed at Rs 1,100.
Technically, most of these stocks are in a solid “Higher Top Higher Bottom” cycle which is a positive sign. The weight of the evidence indicates that it is very likely these scrips may continue to outperform in the second half of the year as well, suggest experts.
Analyst: Hadrien Mendonca, Senior Technical Analyst, IIFL
Mphasis: Buy| Target: Rs 1,235| Stop Loss: Rs 1,055
The stock has been in a sublime uptrend for the past seven months. Our longer time frame analysis indicates that stock has already broken out from a “Multi-Year Pattern”.
Projections of the breakout suggest that the stock has a potential of rallying towards the target of Rs1235, which translates into an upside of 12 percent over the next 8-12 months.
KPIT Technologies: Buy| Target: Rs 335| Stop Loss: Rs 218
At the current juncture, KPIT is going through a consolation phase and is plateauing out. It is quite conventional that after such a solid up move, the stocks do tend to take a breather.
The 50-DEMA has proved to act as a concrete support every time stock was under pressure. Investors can use dips towards Rs245-250 levels to enter the stock.
The stop loss should be maintained at around Rs 218 levels. However, on the upside, we see a potential target of Rs 335 over the next 6-8 months.
L&T Infotech: Buy| Target: Rs 1,760| Stop Loss: Rs 1,594
Since inception, the stock has strongly maintained its higher top higher bottom structure. This suggests that every decline should be a good opportunity to enter the stock.
The 23.6% retracement of the entire up-move from October 2017 lows to recent all-time highs is placed at Rs1500 levels. This should be an ideal zone to enter the stock for a target of the previous peak of Rs1760, translating into an upside of 7 percent.
Analyst: Abhishek Mondal of Guiness Securities Ltd
Jubilant Foodworks Ltd: Hold | Target: Rs 1750 | Stop loss: Rs 1200
On the monthly scale, the stock has given a break out above Rs 1,265-1,270 levels with moderate volumes. The key technical indicators, Relative strength index (RSI) is trading in an overbought zone and MACD is trading above the zero line with positive crossover whereas (+) DI continuously trading above (-) DI which indicates limited downside in the stock.
Based on these observations, traders can hold the stock with a stop loss below Rs 1,200 (closing) for a target of Rs 1,750.
Tech Mahindra Ltd: Hold | Target: Rs 850 | Stop loss: Rs 552
After making a fresh 52-weeks high of Rs 729.50 in April 2018, the stock has been in a profit-booking mode. On the weekly scale, the stock took support at 653 (20 EMA) level recently.
The weekly Relative strength index is trading at 55 levels, making a hinge formation after breakdown from the overbought zone (which is a little bit positive sign) whereas MACD trading above zero line with a negative cross.
At present scenario, the stock is expected to face immediate support around 653 (20 EMA) and 641.50 (23.6 percent retracement of 28th May 2017 to 22nd April 2018 up move) and is likely to find the immediate resistance at 728 (on downtrend line).
Moreover, if price manages to breach Rs 728 levels on the upper side on a closing basis, then it will shift towards 850 level in mid-term. Traders can hold the stock with a stop loss below Rs 552 (closing) for a target of Rs 850.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.The Great Diwali Discount!
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