Kshitij Anand
Moneycontrol News
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The S&P BSE Sensex created history on Wednesday after it surged to a fresh lifetime high of 30,184.22 supported by global as well as domestic cues but the rally is not over yet, say experts.
Investors should focus on stocks which have the potential to ride growth in the economy. Stars are aligned for companies which have domestic focus especially after clarity on goods & services tax (GST) which could well be implemented by July 2017.
There is a clear improvement in earnings which remained muted for the past one year. Analysts are building estimates of a double-digit growth in FY18 as well as FY19 for most companies.
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“The markets are on an upward trajectory supported by an improvement in the country’s fundamentals. This is clearly reflecting in the earnings growth now that has improved from the levels seen 3- 4 quarters ago,” Prasanth Prabhakaran, Senior President & CEO at YES Securities (India) Ltd told Moneycontrol.com.
“Although recovery is yet to be broad-based, earnings are on the path of improvement too. While we do think that markets would continue to trend upwards over the long-term, there could be some aberrations due to global events,” he said.
The Indian Meteorological Department (IMD) said that the near normal monsoon forecast (96% of LPA) for upcoming monsoon season 2017 which lifted investor sentiment.
According to senior officials at the IMD, although there does exist neutral El Niño conditions (30% probability) in the Pacific Ocean, positive dipole movement in the Indian Ocean is expected to counter the Pacific move and result in normal rainfall in the upcoming monsoon season.
Investors will be better off betting on companies which have a rural focus, suggest experts.
The monsoon forecast at 96 percent with an error of +/-5% is comfortably ahead of the muted rainfall received in 2014 & 2015.
“This is likely to result in robust farm production and consequent increase in farm income, which will boost rural demand, thereby benefiting sectors like farm mechanisation (tractors, tillers, pumps), agri-input (Fertilizer, seeds, agro-chemicals), FMCG and consumer durables, among others,” ICICI Securities said in a report.
We have collated a list of stocks from various brokerage firms on stocks to buy with a holding period of 6-12 months:
Monsanto India is an agricultural company, engaged in the business of production and sale of agricultural inputs, including chemicals, pesticides/herbicides, and hybrid seeds. The company's product portfolio includes agricultural and vegetable seeds, plant biotechnology traits and crop protection chemicals.
The sideways consolidation over last 10 months has seen thin volume participation indicating large participation in the direction of the trend signaling a robust price structure.
“We believe the major consolidation phase has approached maturity and the stock provides good entry opportunity with favourable risk-reward setup,” ICICI Securities said.
“We expect the stock to resolve higher towards Rs 3160 over the medium term. The measuring implication of the ten-month consolidation range (2700 to 2240 = 460 points) projected from the breakout point of Rs2600 opens upside towards Rs3060 levels,” it said.
Chambal Fertilizers and Chemicals is one of the largest private sector fertiliser producers in India. The company caters to the need of the farmers in 12 states in northern, eastern, central and western regions of India and is the lead fertiliser supplier in Rajasthan.
The stock is forming a higher peak and higher trough on all time frames signaling persistent demand at elevated levels. The recent price activity signaled a fresh entry opportunity for medium term investors to ride the next up move in the stock.
“We believe the stock presents a good buying opportunity with a decent reward/risk setup for medium-term investors and is likely to head towards Rs 115 over the medium term,” said ICICI Securities report.
Supreme Industries Limited (SI) is India's leading polymers and resins processing company offering a wide range of plastic products. The company operates in various product categories viz. Plastic Piping System, Cross Laminated Films & Products etc. among others.
Going ahead, the company intends to increase its contribution from value-added products to around 35 percent or more of its total revenues through focusing on technological innovations and designs.
“The value added products generally has margins of more than 17 percent for the company which should help increase margins for the company. In terms of revenue growth, the company’s primary driver is increased volumes through wider and deeper penetration across the country supported by the addition of timely manufacturing capacities,” Anand Rathi Research said in a report.
“The company plans to achieve 7 lakh ton per year installed capacity by FY-21. We are positive on the business prospects of the company in the long term and initiate our coverage on Supreme Industries Ltd with a BUY rating and a target price of Rs1450 per share,” it said.
Sbicap Securities initiates coverage on Tiger Logistics with a buy rating and a target price of Rs 275 giving an upside potential of 29 percent from current levels.
The company is growing revenues at over 25 percent CAGR over the past 5 years, we foresee Tiger almost doubling its net profit margin (NPM) to 4.7 percent by FY19e in a span of 5 years.
Tiger is one of the country's leading providers of end-to-end supply chain solutions. Incorporated in 2000, Tiger entered into logistic space with a prime focus on international logistics. The company currently operates as International Freight Forwarders, Customs Clearance Agents, Transporters, Custom Consultants and Project Transportation Specialists with no geographical boundaries.
IIFL Wealth & Asset Management maintains a buy recommendation on Can Fin Homes with a target price of Rs 3086 which translates into an upside of 18.15 percent from current levels.
Driven by favourable macros and intrinsic superiority of the franchise, IIFL’s confidence around Can Fin’s growth and profitability trajectory is solidifying.
Government’s policy impetus for bolstering housing supply in LIG and MIG segments, company’s established presence in affordable housing markets, conservative underwriting philosophy and headroom for operating leverage will underpin robust future growth and return ratios.
The return on equity (RoE) delivery at 25‐26% will be next only to Gruh Finance that trades at substantially higher valuations. Some relatively inferior HFCs have also narrowed valuation gap with Can Fin in recent months.
“We thus see scope for Can Fin’s valuation to re‐rate over the medium term. Retain BUY and raise 12‐month price target to Rs3,086,” said the report.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.comare 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. Analysts could have positions in the stock recommended. 
