The Nifty50 has managed to reclaim the 12,000 level and it should not have been a surprise. This is a market which has shown you signs of a fresh bull run and in that light, the 12,000 mark is just a milestone. The obvious question is what is next?
Well, for starters, I do believe that the market may now take a step back before two steps forward. And if for any reason, there is a reaction towards 11,750-11,800, that may be an entry opportunity. Why is that level important? For starters, it’s the 20-day moving average and hence, very important from trend point of view and secondly, the 11,700-11,750 level was the major resistance which took a lot of time to be conquered. So it should act as a solid base.
With that as my base case, it is time to look at stocks that may prove to be crucial as the Nifty makes its journey to the next milestone of 13,000. Keep in mind, these are not stock recommendations and please do consider your financial advisor before making any decisions.
Kotak Mahindra Bank: This is one stock where the price pattern is indicating a very strong concept called relative strength. It has been a stock for all seasons and chances are barring any unforeseen crisis, the Bank Nifty continues to find this as one of the cornerstones. Kotak is also one of the few banks, which over the last few years, negotiated the NPA crisis very well. Bajaj Finance: What can be said about this stock except that does it happen that a stock year after year gives you a 20-30 percent correction and then makes a new high? Well, that’s Bajaj Finance for you. The QIP was lapped up at a price of Rs 4,000 and it tells you the company is now set to capture the next round of growth and has capital for it. Of course, it remains the most expensive stock in the market but then the same can be said about South Bombay real estate right? Reliance Industries: Like, I wrote on the Dhnateras day, Reliance is looking set for something big. The new businesses such as retail and telecom are clearly showing profitability and there is a deal happening on the refining business. It is one of the giant stocks that has now well and truly woken up. Infosys: Slightly risky one, but I think one statement which will be etched in our memories forever is “Even God can’t change our numbers” (Chairman Nandan Nilekani said about Infosys' numbers). Well, large companies will keep facing whistleblower issues and the jury is out on whether it was poorly handled or not. But I believe “innocent until proven guilty” and if there is one stock which has been the epitome of wealth creation in India, it’s Infosys. Bharti Airtel: Again a slightly risky one but look, the market is taking a call here that telecom will now be a duopoly and, in a duopoly, both companies make money. Data is now everywhere and we are clearly reaching a stage where the tariff has bottomed out and can only go up from here. The stock has clearly shown strength in the wake of all the bad news like the court ruling on adjusted gross revenue (AGR). Larsen and Toubro: The proxy to the Indian economy, period. If the market has to scale 13,000, the assumption is that the economy has turned around and if that is the case, the company that in many ways represents the Indian economy should clearly be the biggest beneficiary. ITC: Could ITC be at the cusp of what HUL was during the 2003-2010 period when the stock did not move an inch and the market grew exponentially? Well, HUL caught up post-2010 and how? It has been a ten-bagger in the last decade. ITC has similarly given 0 returns in last 6 years but there is absolutely no doubt that it’s trading at the kind of valuations where all it needs is 1 big trigger. What will that trigger be? Let’s see. ICICI Bank: Has ever there been a consensus that has been so right for so long? Ever since the management change of ICICI Bank, this is one stock where almost every analyst has had a Buy and higher targets and surprise, all those targets have been met and still stock shows absolutely zero sign of tiring. HDFC Bank: No mention of Bollywood will be incomplete without discussing Amitabh Bachchan right? HDFC Bank is Amitabh Bachchan of the market and like Bachchan says “Hum jahan khade hote hain, line wahin se start hoti hai”. HDFC Bank again like Bajaj Finance remains expensive but then Bachchan till now remains expensive at his age. Dabur and Colgate: The Patanjali threat is well and truly over. It’s a wonderful case study on what companies like Colgate and Dabur did when Patanjali had emerged as a major threat. They clearly figured out that they needed to take Patanjali head-on and they did by introducing products in the same categories that Patanjali went big in (Ayurveda). In the end, as the results show, Patanjali only ended up expanding the market for the large players. SRF: This is more of a momentum and price/volume call. The stock has finally taken out the previous peak of 3,000 after good results and is building on to the gains. The company maintains strong guidance and this is one of those where float is limited with 82% being held by either the promoters or institutions (FIIs and DIIs) Shree Cement: You got to bet on a cement stock right if you are betting on the economy. In that light, Shree Cement is perhaps India’s best cement play. The other big player, Ultratech, has to deal with the issue of group companies like Idea and ACC. Ambuja flattered to deceive many times.
Once again, let me reiterate, these are not stock recommendations and all decisions you make in markets must be your own in consultation with your financial advisor.
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