Mumbai: The odds of Nifty touching all-time high again this year looked all but bright a few months ago in the face of high crude oil prices, rising inflation and trade-related concern. But few stocks have collectively steered the Nifty over 1,000 points from the 2018 low to within touching distance of record high. Of these, the top five —Tata Consultancy Services, Reliance Industries, Hindustan Unilever, HDFC Bank and Kotak Mahindra Bank — have contributed to 66 per cent of this rally. A further rise in these stocks will take Nifty past its record high. The Nifty had hit its lowest this year of 9,951.90 points on March 23 and its lifetime high currently is at 11,171.55 points, scaled in January. ET takes a look at whether these stocks can continue their strong run.
TATA CONSULTANCY SERVICES
Better-than-expected result for the quarter ended June has propelled the stock recently besides the benefit it has got because of weakening rupee and preference for defensive bets in the market.
Analysts’ recommendations are mixed following the June quarter result, with some retaining bearish view due to expensive valuations. Chandan Taparia, derivative analyst at Motilal Oswal advises buying the stock on decline. The stock has recently taken support at Rs 1,870 and is headed towards Rs 2,050-Rs 2,100, which is the buyback price, said Taparia.
For India’s most valued lender, which recently crossed the Rs 10 lakh-crore market capitalisation, the next trigger to watch out for would be its upcoming QIP issue. “The capital raising will be taken positively by the market. Because of uncertainty on FII limit rules, investors are waiting for the capital raising even though there is 2 per cent plus window available for them to buy,” said Suresh Ganapathy, Head of financial services research at Macquarie. In the near term, the stock offers more upside, which can potentially take the Nifty and Bank Nifty further up as it is a heavyweight in both indices. Taparia sees a 3-4 per cent rise in HDFC Bank’s shares in the near term.
Reliance Industries on Thursday broke into the elite club of companies that are valued over $100 billion. Credit Suisse, which has a target price of Rs 1,180 on the stock, is positive on the stock due to its cash generating hydrocarbon business and fast-growing telecom and retail businesses.
According to said Jay Thakkar, AVP-technical & derivatives research at Anand Rathi Financial Services Limited, Reliance Industries is not likely to fall below Rs 1,030. Thakkar pointed out the stock has broken out after consolidating for several months and it is likely to go up to Rs 1,130.
Swapneel Mantri, technical analyst at Sushil Finance sees the stock in a Rs 1,060-Rs 1,140-band with an upward bias.
KOTAK MAHINDRA BANK
A clarity on promoter stake sale in Kotak Mahindra Bank will be taken positively by the market, said Ganapathy of Macquarie. Ganapathy is expecting 25 per cent loan growth going ahead, which he says will drive the overall profitability.
Though these growth levels are partially priced in the valuations, but Kotak Mahindra Bank is a compounding story and as long as it delivers on growth, it will continue to do well, said Ganapathy. Technical charts suggest that the stock could rise 8 per cent more in the next few months. “We expect further upmove in the stock. The stock could rise to Rs 1,500 in the next one to two months,” said Nagaraj Shetti, technical research analyst at HDFC Securities.
The stock has a lot of positives going on for it, which may support its premium valuation, said analysts.
“Valuations are most expensive in three years, but rural recovery will accelerate going ahead with MSP hike, farm loan waivers and third consecutive year of good monsoon. Annual return of 10-12 per cent is doable,” said Abneesh Roy, senior vice president-institutional equities at Edelweiss Securities.
On technical charts, the stock is in a strong uptrend, said analysts. Shetti of HDFC Securities said every fall in the stock is being bought into and the stock could touch Rs 1,900 in one to two months, which means there is further potential upside of 9 per cent.
Source: Economic Times