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The market was caught in a bear trap on Friday, falling sharply due to worry over hydrogen bomb test by North Korea. Equity benchmarks posted their biggest single-day fall in 2017.
The NSE Nifty closed below its psychological 10,000 level, down 1.56 percent at 9,964.40 on Friday and lost 1.2 percent for the week. The BSE Sensex also closed below the 32000-mark, down 447.60 points at 31,922.44.
Experts expect the sentiment to remain weak due to geopolitical tensions. Hence, they see some consolidation in the coming F&O expiry week.
"We believe that the volatility will remain high in the coming week as well due to several important data and events. On local front, the scheduled derivatives expiry on Thursday will keep the traders busy throughout the week," Jayant Manglik, President, Retail Distribution, Religare Securities said.
Apart from the above factors, FII trend, monsoon update and currency movement will also remain on the participants’ radar, he added.
He said the Nifty has crucial support at 9,900 and its breakdown will result in further slide while 10,100 would act as resistance in case of any bounce.
Here is a list of top four stocks which could give up to 31% return in next 9-12 months:
Ramco Cements | Broking House: ICICIdirect | Recommendation: Buy | Target: 822 | Upside: 15 percent
The company is planning to expand its capacity by 20 percent to 19.5 MT over the next 18 months. The capacity expansion in the east will enable the company to remove capacity constraint and also increase its market share.
The research firm believes that the company’s robust cash flow generation will not only enable to fund its capex through internal accruals but also reduce its debt-equity further to 0.2x.
Going ahead, the revenues of the company are expected to increase at 12.2 percent CAGR in FY17-20 mainly led by capacity expansion and increased government spending.
Considering the capacity expansion, better leverage (D/E: 0.2x) and cost efficiency, Ramco is currently trading at attractive valuations.
ICICIdirect has initiated coverage on Ramco with a Buy rating and an SOTP based target price of Rs 822.
Hindustan Unilever | Broking House: Motilal Oswal Research | Recommendation: Buy | Target: 1400 | Upside: 16 percent
The research firm expects Hindustan Unilever to report 18 percent PAT CAGR over FY17-19, as against 6.1 percent in the last three years, 10.6 percent in the last five years and 10.7 percent in the last 10 years.
While valuations are not cheap at 45.2x FY19 EPS (given potentially strong earnings growth), Motilal Oswal believes premium valuations are justified, particularly as return ratios and dividend yield remain best-of-breed.
It has maintained Buy rating on the stock with a target price of Rs 1,400 per share.
AksharChem India | Broking House: Kotak Securities | Recommendation: Accumulate | Revised Target: 800 | Upside: 9 percent
The company has reported in-line performance in Q1FY18, as its net sales were up 14.6 percent at Rs 63.3 crore, while PAT came at Rs 7.2 crore, down 20 percent and EBITDA declined 16 percent to Rs 12 crore, YoY.
The operating performance was impacted by increase in key raw material costs. EBITDA was also impacted by rupee appreciation, as the company derives almost 75 percent of its revenue from the export market.
Kotak expects the revenue contribution from pigment business to go up gradually from around 33 percent currently to 60 percent, on the back of higher production backed by expansion.
Earnings growth should resume from FY19 onwards which could help improve valuations in future, as business transformation from cyclical to more stable earnings will change financial trajectory.
It recommended Accumulate rating, with a revised target price of Rs 800 (earlier Rs 960 per share).
VIP Industries | Broking House: Kotak Securities | Recommendation: Buy | Target: 325 | Upside 31 percent
Kotak has initiated coverage on VIP Industries (VIP) which is the market leader in the organised luggage industry in India with more than 50 percent market share, manufacturing and supplying a wide range of hard sided and soft-sided luggage.
It expects the company to maintain a strong growth momentum with increasing penetration of luggage bags and back-packs, healthy GDP growth, improving disposable income, increased air and rail travel and with increased use of luggage as a gifting tool.
It expects revenue CAGR of 17 percent and earnings CAGR of 28 percent over FY17 to FY20 with improvement in operating margins and return ratios.
It believes VIP would be one of the major beneficiaries of healthy GDP growth, rising income level, changing life style and implementation of GST. It has initiated coverage on the stock with a target price of Rs 325 per share.
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