After gaining more than 1 percent last week, the market opened on a positive note on December 16, pushing the Sensex and the Nifty Bank to fresh highs intraday.
The market reacted positively to global cues including an interim US-China trade deal and the UK election outcome despite weak macroeconomic data at home.
Wholesale price-based inflation rose to 0.58 percent in November, as against 0.16 percent in October due to increase in prices of food articles, data released by the government during the day showed.
The food inflation rose to 9.02 percent against 7.65 percent, while primary articles inflation was at 7.68 percent versus 6.41 percent, month on month.
But, experts were upbeat about the market.
"We expect the prevailing momentum to extend further in the coming week too. The Nifty has the potential to test 12,300 ahead, while 11,900 will act as a cushion in case of any profit taking," said Ajit Mishra, Vice President, Research, Religare Broking.
"We advise caution in stock selection and preferring counters which are trading in line with the benchmark trend. We expect banking, financials, auto, metal and realty pack to do well, so plan your trades accordingly."
In the week gone by, foreign institutional investors (FIIs) bought equities worth Rs 129.71 crore, while domestic institutional investors (DIIs) bought shares worth Rs 1,848.35 crore.
Here are the top five brokerage pick with an upside of 15-31 percent in medium to long term. Returns have been calculated on the closing price on December 16.
Sharekhan
V-Guard Industries | Rating: Buy | LTP: Rs 217 | Target: Rs 285 | Upside: 31 percent
V-Guard is expected to achieve its conservative revenue growth guidance of 10-11% for FY2020 through multi-pronged strategies-- replacement of low margin products with premium products, expanding reach in suburbs and tier II & III cities and the launch of new products in kitchen appliances and water purifier range.
Increasing contribution from non-South regions and a move towards in-house manufacturing over the next two-three years will bring in benefits of scale and better control over gross margins.
The stock is trading at a P/E of 35x/32x its FY2021E/FY2022E earnings, which provides an opportunity to invest in the stock considering 20% net earnings CAGR over FY2019-FY2022E.
Motilal Oswal
Hindustan Unilever | Rating: Buy | LTP: Rs 1,974 | Target: Rs 2,378 | Upside: 20 percent
The company is seeing nothing extraordinary in ad-spends or competitive intensity and will continue its focus on developing the market and the premium segment.
The company is seeing slight sequential improvement in channel liquidity and is offering some credit wherever required.
Voltas | Rating: Buy | LTP: Rs 679 | Target: Rs 785 | Upside: 15 percent
The company is benefiting from the fallout of the US-China trade war. Due to high inventory build-up in China, the company was able to avail high discounts, which more than offset the import duty increase.
Based on the present situation, it is confident of achieving an 11% EBIT margin in the UCP segment without any price hikes.
Management expects strong momentum in the AC business to continue in 2HFY20.
The company expects strong order wins in 3QFY20 as well, given its L1 position. It is eyeing strong growth from the water segment and metro/airports.
SMC Global
Security & Intelligence Services India | Rating: Buy | LTP: Rs 909 | Target: Rs 1,049 | Upside: 15 percent
The company has consistently strengthened its market position in key service segments and geographies through organic and inorganic routes and has emerged as the leading security-service provider in India and Australia.
It has reported a healthy scale up in operations and also expanded its profit margins in Q2 FY2020, aided by margin-accretive acquisitions done over FY2019 as well as organic growth across entities.
The management believes that the recent acquisitions would help in strengthening its position in key micro-markets in India (like Gurugram and Bengaluru) and in segments (such as facility management in the healthcare segment) and expand its footprint to Singapore (via Henderson) and New Zealand (via P4G).
AnandRathi
Relaxo Footwears | Rating: Buy | LTP: Rs 608 | Target: Rs 744 | Upside: 22 percent
The company has effectively increased its reach in rural India and has gained traction in urban India, especially in the “home wear and leisure” segment. A significant proportion of its revenues comes from the north and east.
The company plans to add at Bhiwadi a capacity for 100,000 pairs a day over the next three years with a capex of Rs 900 million.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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