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Sensex Could Top 44,000 After General Elections 7 Buy Ideas Could Return 20-90%
Sensex Could Top 44,000 After General Elections 7 Buy Ideas Could Return 20-90%
Sensex Could Top 44,000 After General Elections 7 Buy Ideas Could Return 20-90%
Sensex could top 44,000 after general elections; 7 buy ideas could return 20-90%
The Sensex is poised to touch 36,000-36,500 in the near-term and eventually go up to 44,000 after general elections
2019, Nalin Shah, Director at NVS Brokerage said in an interview to Moneycontrol's Sunil Shankar Matkar.
Q. The market has turned volatile, following the sharp correction of nearly 13 percent from record highs. Is
the correction over or the worst yet to come? Is there a timeline to when the uptrend would resume towards
fresh record highs?
A. We believe that the market has completed the correction and bottomed out near 33,900 on Sensex. We believe
that the Sensex is poised to touch 36,000-36,500 in the near-term and eventually go up to 44,000 after general
elections 2019.
Q. Are global and domestic concerns fully priced in? Are there any risks, both local and global, going ahead?
A. Both domestic and global concerns are dynamic in nature. On the domestic front, the uncertainty surrounding
upcoming state elections and the government's inability to spruce up exports will continue to keep the rupee under
pressure.
Globally, the trade wars, an uncertain foreign policy of the US and high crude oil prices will result in high volatility.
However, we do feel that at sub-34,000 BSE Sensex levels most of the domestic and global concerns are priced in.
Q. After more than 50 percent rally, FMCGs corrected 15-40 percent in last one and half months. Are
valuations looking better to enter this sector now?
A. Given the large consumer landscape of India, certain pockets of the FMCG space look attractive. However, the
price levels in other sectors and companies like Bajaj Finance, TVS Motor, Sterlite Technologies, Pfizer, etc., had
come down to levels where they were a must buy and hence preference should be given to them over the FMCG.
Q. Liquidity concerns in NBFCs have dominated cues in the recent past. What is your advice to investors in
banking and NBFC space?
A. A lot of the liquidity concerns were overblown and resulted in many large names being beaten down. We believe
that in the NBFC space, the men will be separated from the boys.
Market leaders, both in the NBFC and housing finance space viz., Bajaj Finance, Bajaj Finserv, HDFC and LIC
Housing Finance will lead the bounce back.
In the banking space, we continue to like private sector banks like Kotak Mahindra Bank, RBL Bank, HDFC Bank, etc.
Q. How do you expect the rupee to perform ahead and what is the outlook on crude?
A. Rupee will continue to be under pressure due to widening CAD and rising oil prices. However, we believe that the
possibilities and working out of alternatives by the Indian government to reduce the dependence on the US dollar and
ultimately reducing the pressure could result into softening of the dollar/rupee parity and the crude could move down
towards –72 levels.
These alternatives could be in the form of resuming oil import from Iran with rupee payments, similar deals with
Russia in ruble payments and potential trade developments with China in Chinese renminbi (yuan) could have a very
positive impact on the rupee.
One also needs to watch the situation after the full effect of Iran sanctions from November.
Q. What are the top seven ideas that would provide strong returns over three years?
The only fully integrated cable manufacturer in the world is expanding its manufacturing capacity to 53 MfKm by June
2019.
Firm OFC demand growing on the back of impetus provided by the governments, global per capita data
consumption set to multiply by 5 times, data cost at an all-time low, robust order book and the upcoming 5G
technology will have an exponential shift in the OFC consumption thus providing a very strong wave of fibre
development and visibility of excellent financial performance of over next 10-12 years.
Factors to be considered in the stock - increase in revenue from security services; increase in exclusive listed stocks
turnover; higher turnover from StAR MF platform; higher market share in currency derivatives and significant pickup in
volumes at India International Exchange.
BSE will also benefit from huge net cash reserve; high dividend yield;Â introduction of more asset classes; potential
easing of restriction of FIIs trading in currency futures; and introduction of more global commodities.
Consumer business contributes around 47Â percent of the total AUM growing at a rapid pace.
Commercial business demonstrating a growth of around 50-55Â percent over past few years, white goods market
expected to grow, replacement cycle of consumer products reducing, double-digit growth in sales of two-wheelers in
India, rise in brand awareness amongst the urban population and more salaried youths joining workforce will drive the
demand for finance across various segments of the society.
JTEKT plans to be debt free in the span of three years by merging one of its associates (JSAI). The to-be merged
entity has an ample amount of cash on its balance sheet which JTEKT plans to utilise for debt reduction. The shift
from Hydraulic Power Steering to Electric Power Steering is going to be a game changer for the industry and JTEKT
India, leveraging the expertise of its parent JTEKT Corporation, will be able to spearhead the disruption in the
industry.
Being one of the top MNC Company, government’s initiative of 'Ayushman Bharat', thrust on healthcare by
providing quality drugs to the masses and curbing spurious and substandard quality of drugs and so on could give a
huge boost to the company like Pfizer with proven drugs portfolio.
Further, the share seems to have completed its correction from Rs 3,800 to Rs 2,490 per share making it a very
attractive buy.
Domestic business gaining its market share, JLR undertaking a mammoth capex of Rs 42,000 crore, higher
investment in R&D, back to back product launches, production ramp up, increased in-house engineering to reduce
development cycle time, developing higher performance electric vehicles, cost-cutting initiatives, China and India
offering high growth opportunities led by GDP growth, strong domestic consumption and favourable demographic
support give a boost to an Indian multinational like Tata Motors.
With new launches and enhanced distribution reach, ranked as a numero uno in customer satisfaction for the third
consecutive year in a row, strategic partnership with BMW Motorrad Company, coupled with margin expansion, TVS
is one of the top picks from the automobile sector.
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