Top 5 stocks in which brokerages initiated coverage in August can rally up to 32% in 1 year

The Bulls failed to reclaim control on D-Street in the month of August as the S&P BSE Sensex slipped nearly 800 points or 2.4 percent. But, there was plenty of stock specific action as nearly 20 stocks rose between 50-100 percent in the same period.

Most of the domestic brokerage firms such as SBI, Kotak Private Client Research, HDFC Securities, as well as Equirus have initiated coverage for the first time in certain stocks this week.

We have collated a list of top 5 stocks on which brokerage initiates coverage in August

Bodal Chemicals: BUY| Target Rs 215| Return 28%

SBIcap Securities initiates a coverage on Bodal Chemicals with a buy recommendation and a target price of Rs 215.

NBCC: BUY| Target Rs260| Return 27%

SBIcap Securities initiates a coverage on NBCC with a buy recommendation and a target price of Rs 260. With its excellent track record of implementing complex projects, NBCC has become the de-facto choice for being project management consultant (PMC) for big ticket projects to be rolled out under new government initiatives.

Asian Granito India: BUY| Target Rs603 | Return 32%

Kotak Securities initiated coverage on Asian Granito India Ltd with a buy rating and a target price of Rs603. Asian Granito, promoted by Mr. Kamlesh Patel and Mr. Mukesh Patel in the year 2000, is engaged in the manufacture and sale of ceramic wall and floor tiles, vitrified tiles, digital polished glazed vitrified tiles, digital wall tiles, marble, and quartz.

We value the company at 23x P/E based on its relative comparison with companies in the same segment and riding on consumerism.

Maruti Suzuki India: Long| Target Rs8993| Return 16%

Equirus initiated coverage on Maruti Suzuki for the first time with a long rating and a target price of Rs 8993.

The brokerage firm is of the view that MSIL is a structural growth story and waiting periods on some of its large-selling models will help it trade at premium valuations, similar to what we saw in case of Eicher Motors in the past.

BSE Limited: BUY| Target Rs1200| Return 23%

HDFC Securities initiates a coverage on BSE with a buy rating and a target price of Rs 1200. The Bombay Stock Exchange Ltd (BSE) is Asia’s oldest stock exchange (estd. 1875 and listed in Feb-17).

Long term investors should take cognizance of its recent (if overdue) renaissance under a market savvy management, including its recent listing. With the latest technology platform, BSE claims to be ten times faster than NSE (its much larger competitor).

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BSE to move 4 firms to restricted segment for violating rules

Leading stock exchange BSE will next month shift stocks of four firms to the restricted trading category for not complying with listing rules. 

Delta Leasing and Finance, Muller and Phipps India, Unimers India and Visu International will be transferred to the Z group from September 1, the BSE said in a notice dated August 24. 

The Z group includes companies that have failed to comply with Sebi's listing requirements. 

The firms will be moved to the restricted trading category "due to non-compliances" for two consecutive quarters -- January-March and April-June -- with Regulation 31 of Sebi (Listing Obligations and Disclosure Requirements) Regulations, the exchange said. 

Regulation 31 relates to disclosure of shareholding pattern within a timeframe. 

The BSE also said the trades in the four scrips executed in the Z group will be settled on the trade-for-trade basis. 

Under this segment, no speculative trading is allowed, and delivery of shares and payment of consideration amount are mandatory. 

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GST Council to discuss rates of agri services, e-way bill issues

The all-powerful Goods and Services Tax (GST) Council will take up representations from the industry regarding revision of rates, while focusing primarily on changing tax rate of agriculture and agricultural services such as warehousing and garment job works.

The Council, headed by Finance Minister Arun Jaitley, will meet on Saturday to take a stock of implementation the country’s biggest tax reform that was rolled out on July 1.

It will also iron out crucial issues related to electronic-way (e-way) bill, finalise a mechanism to operationalise anti-profiteering clause and revisit the demands of the textile as well as other sectors, a senior government official told Moneycontrol.

The rates of items such as ribbons and gas stove may also be taken up for discussion, with agriculture being the main focus of the government.

Cigarette and tobacco products may be taken up yet again by the Council, the official said.

"Area-based exemptions for Assam and other north-eastern states may also be discussed," the official said.

Sources said that rates of IT products, fly-ash bricks, bio-diesel and certain food items such as dried fish and vegetable blended edible oil is likely to be brought down.

The Centre and the State is divided on certain parameters related to the e-way bill. For instance, states are of the opinion that the bill should be obtained for intra-state movement of goods, while Centre feels that it should be generated only for inter-state movement, the official explained, adding that the Council is most likely to debate on these issues.

While GST rate for certain items may be revised, the government has time and again reiterated that change in rate is not something that the Council in keen on, until something has been left out or there has been an error in judgement by the fitment committee.

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RBI allows overseas investors to bet more on Interest futures market

The RBI has created a separate limit for the foreign portfolio investors investing in the interest rate futures (IRF) market -- a market normally tapped by those holding government securities to hedge interest-rate risks. By doing so, the central bank has indirectly raised the bond holding limit of FPIs. 

"It is proposed to allocate FPIs a separate limit of Rs 5,000 crore for long position in IRFs," RBI said in the policy statement. "The limits prescribed for investment by FPIs in government securities will then be exclusively available for acquiring such securities." 

Interest rate futures (IRFs) are no different from stock and currency futures on which individuals and institutions bet either to trade or cover risks against bond investments. In IRF contracts, a trader will go long when he expects the price of the 10-year underlying bond to rise. 

"There are a few FPIs, who trade in interest rate futures," said Sandeep Bagla, associate director at Trust Capital Services. "With this separate limit, others too can join them. Overall the move will give more space for FPI participation." 

"RBI too does not need to worry about exchange rate risk as long as IRF trades are concerned," he said. 

Overseas investors have been aggressively investing in Indian debt securities. But they have exhausted 99.34 per cent of the total limit now at Rs 1,87,700 crore, shows data from National Securities Depository. They have nearly used up the full limit in corporate bonds pegged at Rs 2.26 lakh crore. 

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Commodity Market Update

Silver prices climbed Rs 100 to Rs 39,250 per kg at the bullion market today, tracking a firm trend overseas and increased offtake by consuming industries. 

Gold, however, remained flat at Rs 29,300 per 10 grams in scattered deals even as it strengthened overseas. 

Traders attributed the rise in silver prices to positive global cues amid pick-up in demand from industrial units and coin makers at the domestic spot market. 

Globally, silver rose 1.09 per cent to USD 16.74 an ounce and gold by 0.83 per cent to USD 1,269.10 an ounce in New York in yesterday's trade. 

In the national capital, silver ready went up by Rs 100 to Rs 39,250 per kg and weekly-based delivery by Rs 310 to Rs 38,460 per kg. 

Silver coins, however, remained steady at Rs 71,000 for buying and Rs 72,000 for selling of 100 pieces.

On the other hand, gold of 99.9 per cent and 99.5 per cent purity held steady at Rs 29,300 and Rs 29,150 per 10 grams, respectively. 

Sovereign too remained unaltered at Rs 24,400 per piece of eight grams. 

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Q1 performance of India's top 5 companies

Profit or loss -

We are half way into June quarter results and more than 15 Sensex companies have already declared their quarterly numbers.

While India Inc’s earnings growth continued to lag estimates for June quarter, the domestic stock market last week hit levels never seen before on Dalal Street.

Here is a review of earnings of India’s 10 most valued companies.

Reliance Industries

Reliance Industries’ consolidated net profit rose 28 per cent to Rs 9,108 crore in the June quarter, compared with Rs 7,113 crore in the same quarter last year.

Profit was boosted by Rs 1,087 crore earned from the sale of stake in Gulf Africa Petroleum Corp.

HDFC Bank

HDFC Bank, the second largest private sector lender, reported a 20.2 per cent year-on-year (YoY) rise in net profit at Rs 3,894 crore for the June quarter.

The lender had reported Rs 3,239 crore profit in the year-ago quarter.

Maruti Suzuki

The country’s largest car maker, Maruti Suzuki India, reported 4.4 per cent increase in net profit at Rs 1,556.4 crore for the first quarter ended June 30, 2017.

Due to strong volume growth, its revenue increased by 16.4 percent to Rs 19,777.4 crore viz-a-viz year-ago quarter.

Infosys

India's second biggest software services exporter Infosys reported a 1.4 per cent growth in its net profit at Rs 3,483 crore for the April-June quarter.

The IT major overshot first-quarter profit estimates helped by key client wins. Infosys added eight clients in its $100 million category during the quarter.

Kotak Mahindra Bank

Kotak Mahindra Bank's June quarter earnings rose 23 per cent to Rs 912.7 crore driven by growth in all its businesses from retail to treasury to corporate lending.

Net interest income climbed 17 per cent to Rs 2,245.5 crore, from Rs 1,919 crore last year.

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Today Maruti Suzuki Q1 results

Today Country’s largest carmaker Maruti Suzuki may report double-digit growth in net profit for the quarter ended June 30, 2017. 

Brokerage firm Edelweiss Securities sees 20.60 per cent YoY rise profit after tax, while EBITDA and revenue may increase by 16 per cent and 16.40 per cent on YoY basis. 

Market experts see volume growth of 13 per cent YoY (and 5 per cent QoQ) to around 3,94,571 units, led by better performance from Baleno and Brezza with incremental Gujarat production, though slightly impacted by GST transition. 

Shares of the company settled 0.84 per cent up at Rs 7577.95 on Wednesday. 

According to brokerage Motilal Oswal, the car major may post 9.5 per cent YoY rise in bottomline figures at Rs 1,627.40 crore against Rs 1486.20 crore in the same quarter last year. 

Motial Oswal sees 110 basis points YoY fall in EBITDA margins due to the impact of Gujarat plant and higher fixed cost due to same. Higher offers due to GST transition would also impact margins. 

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Share Market Morning Update

Indian market witnessed a volatility week as benchmark indices closed marginally higher but over their crucial support levels. The Nifty50 closed 0.29 percent higher at 9,915 and the S&P BSE Sensex ended above 32,000 for the week ended 21 July.

The Nifty50 index is trading at its all-time high and the recent up move in the index has not been supported by broad market participation which in itself is a concern. It looks like that Indian market might be trading in last leg of its rally, suggest experts.

We have collated a list of top five stock ideas which could give up to 14% return in the next 5 sessions to 2 months:

Manappuram Finance: BUY| Target Rs119| Stop Loss Rs97| Return 14%

In last few months, this stock has consolidated in a broad range of Rs88-105. The prices are on the verge of a breakout from the resistance end of the mentioned range. In last few sessions, the volumes have increased with upmove in prices, which is a positive sign.

Hence, traders are advised to buy this stock at current levels and on declines up to Rs 104.50 for a target of Rs 119 over the next 14 – 21 sessions. The stop loss should be fixed at Rs 97.

IndusInd bank: SELL| Target Rs1518| Stop Loss Rs1599| Return 3%

This has been one of the steady outperforming stocks within the ‘Private’ banking space. At present, the stock is trading near its all time high; but, we are now observing a possibility of some short term correction.

Karnataka Bank: SELL| Target Rs142| Stop Loss Rs161| Return 9%

Post a stupendous up move from the levels of Rs100 to Rs180 in a span of less than seven months, the prices have undergone a consolidation phase since last few weeks.

Hence, traders are advised to sell this stock below Rs155 for a target of Rs 142 in short term. The stop loss should be fixed at Rs 161.

Container Corp: BUY| Target Rs1270| Stop Loss Rs1120| Return 7%

The stock closed at Rs1,180.55 on 21st July 2017. It made a 52-week low at Rs8,44.45 on 21st December 2016 and a 52-week high of Rs1,251.60 on 23rd May 2017. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at Rs1,097.47

Traders can buy in the range of Rs 1,165-1,170 levels for the upside target of Rs 1,270-1,300 levels with a stop loss below Rs 1,120.

Bharti Infratel: BUY| Target Rs460| Stop Loss Rs 375| Return 12%

The stock closed at Rs410.30 on 21st July 2017. It made a 52-week low at Rs281.75 on 28th February 2017 and a 52-week high of Rs424.75 on 18th July 2017. The 200-days Exponential Moving Average (EMA) of the stock on the daily chart is currently at 363.59.

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Asian Research House Investment Advisor

Market Closing Update - Sensex, Nifty close lower after rangebound trade

The 30-share BSE Sensex was down 50.95 points at 31,904.40 and the 50-share NSE Nifty fell 26.30 points to 9,873.30 despite positive global cues. It was weighed down by correction in FMCG, technology, metals and pharma stocks.

HDFC Securities said, "Nifty managed to hold on to 9800 support and now that becomes the base for the short-term.

The broader markets also were under pressure, with the BSE Midcap index falling half a percent on weak breadth. About 1,457 shares declined against 1,263 advancing shares on the exchange.

Kotak Mahindra Bank fell 1.44 percent and Bajaj Auto declined 0.2 percent after disappointing June quarter earnings. ABB India gained more than 6 percent but managed to settle with only 0.4 percent gains post Q2 numbers.

ONGC gained 1.75 percent and HPCL lost 4 percent after the Cabinet gave ONGC in-principle approval to buy government's stake in HPCL.

Bajaj Hindusthan, Dhampur Sugar, Mawana Sugars, Rajshree Sugars, Sakthi Sugars, Shree Renuka Sugars, Simbhaoli Sugar, Triveni Engineering and Ugar Sugar rallied 2-10 percent.

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Base Metals Down on weak demand

Lead futures shed 0.79%, hurt by muted spot demand 

Lead prices were down 0.79 per cent to Rs 150.20 per kg in futures trading today as participants reduced their exposure amid subdued demand from consuming industries in the spot market. 

At the Multi Commodity Exchange, lead for delivery in July declined by Rs 1.20, or 0.79 per cent, to Rs 150.20 per kg, in a business turnover of 889 lots. 

Likewise, the metal for delivery in August shed Rs 1 shed Rs 1.10, or 0.72 per cent, to Rs 151 per kg in two lots. 

Marketmen said the weakness in lead futures was due to a sluggish demand from battery-makers at the domestic markets. 

Nickel futures fall as muted demand hurts 

Amid muted demand at domestic spot markets and profit-booking by speculators nickel prices dropped 1.47 per cent to Rs 598 per kg in futures trade today. 

At the Multi Commodity Exchange, nickel for delivery in July was trading Rs 8.90, or 1.47 per cent down, at Rs 598 per kg, in a business turnover of 2,314 lots. 

The metal for delivery in August also shed Rs 8.90, or 1.45 per cent, to Rs 603.20 per kg, in a turnover of 106 lots. 

Analysts said the fall in nickel prices in futures trade is mostly attributed to a weakening trend at the domestic spot markets due to easing demand from alloy-makers. 

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