Up to 400% rise in 36 sessions! These stocks still have analysts swooning over them
Analysts are advising investors to pick beaten-down quality names to build a robust portfolio.
Analysts attributed it to myriad surveys showing a clear edge for incumbent Prime Minister Narendra Modi to return for another stint in power in the ongoing general elections.
Plus, flow of overseas portfolio money swelled suddenly on attractive valuation of Indian stocks and a U-turn in global central banks’ tightening spree.
The US Federal Reserve turned accommodative in February belying projections of two rate hikes in 2019. In India, the Reserve Bank of India has cut policy rates twice back to back and changed its policy stance to ‘neutral,’ helping turn around investor sentiment and lift market mood in last two months.
Some 80 per cent of the actively-traded stocks have rallied up to 400 per cent since February 19 after across-the-board bearish sentiment between January 2018 and January 2019 that left nine out of every 10 BSE-listed stocks trading in the red.
Several smallcap stocks such as BIL Energy, Jyoti Structures, Jai Balaji Industries, OCL Iron and Steel, VKJ Infradevelopers, Meenakshi Enterprises, Shree Precoated Steels, Nimbus Foods Industries and Vikas WSP jumped between 100 to 400 per cent in this bull run.
The 30-pack Sensex hit an all-time high of 39,270 on April 3, 2019. That may have lifted the index too much, too fast.
But analysts bet that this recovery in the broader market is likely to continue. They are advising investors to pick beaten-down quality names to build a robust portfolio.
Karvy Stock Broking says midcaps and smallcaps should perform well over the next 12 months. The BSE Midcap and Smallcap indices have already risen 11 per cent and 14 per cent, respectively, between February 19 and April 11 against Sensex’s 9 per cent gain.
“Despite the strong rally, equities should see more upside in the remainder of 2019. Economic growth should pick up pace by the second half of FY2019-20, and more importantly, the capex cycle is likely to revive, and this can help drive growth in corporate earnings. Better growth numbers and a favourable election outcome would lead to the next legup for equities,” the brokerage said.
Among the other gainers, Adhunik Metaliks, Vikas Proppant & Granite, Suzlon Energy, Zodiac Clothing, Indiabulls Integrated Services, SORIL Infra, Matrimony.com, Indiabulls Real Estate, The Jammu & Kashmir Bank and Lakshmi Vilas Bank were among 58 stocks that rallied 50-100 per cent.
Majority of stocks on this list had plunged up to 88 per cent between January 1, 2018 and February 18, 2019.
Foreign institutional investors, who offloaded shares worth Rs 36,890 crore (net) during January 2018 and January 2019, have poured in more than Rs 60,000 crore since January 2019.
As many as 1,000 beaten down stocks, including Religare Enterprises, Manpasand Beverages, Talwalkar Better Value Fitness, Sunteck Realty, Can Fin Homes, Prabhat Dairy and PC Jeweller, have rallied between 10 per cent and 50 per cent from their mid-February troughs.
On the other hand, some 200 stocks including HDFC, Relaxo Footwears, ICICI Bank, Berger Paints, RBL Bank, Reliance Industries, IOL Chemicals, Merck, NIIT Technologies and L&T Technology Services have extended their last year’s gains into 2019.
Centrum Wealth Research says a reversal in cycle builds the foundation for the next bull market. Calendar 2019 offers a vast gamut of opportunities despite periodic volatility backed by political developments, economic slowdown and fears of bad monsoon.
Cycles turn fast. One should not miss the opportunities as India marches towards becoming a $5 trillion GDP economy in 7-8 years from the current level of $2.5 trillion.
On the equity front, Centrum believes the ongoing rally will remain largely broadbased in comparison with the one seen last year, which was focused mainly on select a few largecaps. One should predominantly stick to high-quality stocks backed by strong fundamentals such as low (or zero) debt, high profit margins and top quartile return ratios.
As a piece of advice to investors, the brokerage said one should befriend volatility, but stay away from companies with corporate governance issue.
A novice investor should consult a financial adviser to build a good portfolio. More money can be made by being hopeful than being fearful, it said.