The Sensex rose nearly 7 percent in the June quarter, but it is unlikely to return as much in the quarter ending September. Majority of the action was seen in largecaps while small- and midcap stocks continue to reel under pressure.
The rally, which propelled the Sensex to record highs, saw just a handful of largecap stocks rise, while most well-known stocks in the broader market were hitting 52-week lows.
The question that most investors are asking is whether there are any sure shot winners. Anecdotal evidence suggests that 10 stocks have returned a minimum 15 percent and a maximum of over 100 percent in the September quarter in the last 3 years.
We have considered companies with a minimum markets capitalisation of Rs 1,000 crore.
Stocks which can qualify as sure short winners based on historic performance includes: Caplin Point Laboratories, Divi’s Laboratories, Confidence Petroleum India, Gujarat Ambuja Exports, IG Petrochemicals, JBM Auto, Thirumalai Chemicals, Trent, V2 Retail and Venky’s (India).
JBM Auto rose 16 percent in the September quarter of 2015, followed by 58 percent in 2016. It doubled investors’ wealth in 2017. Trent, which has a mcap of over Rs 11,000 crore, rose 15 percent in the September quarter of 2015, followed by 18 percent in 2016 and 24 percent in 2017.
The Sensex hit a fresh record high on Monday, while the Nifty is trading around its crucial support placed at 11,000 levels.
Experts said the rally is not over yet and the Nifty50 could well hit fresh record highs above 11,171 in the next 3-6 months.
“Benchmark indices are in a solid uptrend thanks to the unabated rally seen in a handful of index stocks. There is a huge divergence between the midcap and smallcap indices compared to benchmarks,” Hadrien Mendonca, senior technical analyst at IIFL, said.
“Our larger timeframe analysis indicates that the Nifty has broken out from a bigger consolidation base on the weekly chart. Projections of the breakout indicate that the Nifty is all set to move past its previous all-time high. If the breakout unfolds the way it should, the Nifty may well be on its way towards the 11,400 plus levels in the coming 3-6 months,” he said.
He was quick to add that the breakout stands void only if the Nifty fails to hold above the crucial support zone of 10,800-10,850 on the downside.
Here's what analysts have to say on the stocks listed above and whether investors should buy, sell, or hold them for the next 6-12 months. Analyst: Mazhar Mohammad, chief strategist – technical research & trading advisory, Chartviewindia.in Thirumalai Chemicals: Buy| Target: Rs 1,945| Stop Loss: Rs 1,467
After topping out around Rs 2,440 kind of levels with a Double top formation, this counter appears to have posted a bottom at a recent low of Rs 1,172.
There seems to be a fresh buying opportunity as it registered a price and volume breakout in Tuesday’s session. Hence, positional traders can create fresh longs with a stop below Rs 1,467 on a closing basis for a target of Rs 1,945.
V2Retail: Hold| Target: Rs 342| Stop Loss: Rs 380
This counter is gradually drifting down after registering a pullback rally from the lows of Rs 342 to a recent high of Rs 497. However, price behaviour of the last couple of trading sessions on weekly charts with narrow ranges is suggesting that this counter may be on the verge of a breakout in either of the directions.
Such breakouts will result in a swift move based on the direction of the breakout. In case if it closes above Rs 425 then a fresh buying should be considered for a target of Rs 490 whereas a breakdown below Rs 380 on a closing basis.
It may lead to a retest of its corrective swing low of Rs 342. Hence, at best it is a hold with a stop below Rs 380 on a closing basis.
Trent: Exit on rallies & re-enter above Rs 365| Target: Rs 425
For the last 6 months, this counter is stuck in the range of Rs 360 – 295 levels. After testing the upper band of this range in the current week, this counter appears to be heading to the lower boundary of its consolidation.
After witnessing correction last week from the higher end of the range, it looks prudent to exit this counter on rallies around Rs 350 levels and re-enter only on a breakout above 365 on a closing basis. On such a breakout a huge target around Rs 425 can be expected.
JBM Auto: Buy| Target: Rs 409| Stop Loss: Rs 305
Interestingly, this counter started to rally last year from the lows of Rs 259 in July 2017 and in the next couple of months it registered a major top around Rs 629 in September 2017.
Since then it has given up all the gains and appears to be testing its critical averages on the long-term charts.
Hence, long-term investors can buy into this counter with a stop below 305 on a closing basis. In case if a fresh leg of rally unfolds from current levels after consolidation then a target around 409 can be expected over a period of time.
Venkys India: Hold but exit on rallies towards Rs 2,700| Stop Loss: Rs 2,120
This counter is in a strong downtrend as it took a hit of around 50 percent from its lifetime high of Rs 4,725 registered in April. As it retraced around 62% of its entire rise, from the lows of 397 – 4,725, at the recent low of 2,126 some stability and pull back rally can’t be ruled out.
In that case, a strong pullback may see this counter targeting Rs 2,780 kind of levels. As downward momentum is looking strong breach of Rs 2,126 on a closing basis may drag it down towards an initial target of Rs 1,900 and thereafter Rs 1,600 can’t be ruled out.
Investors can hold the stock with a stop below Rs 2,120 on a closing basis and exit on rallies towards Rs 2,700.
Analyst: Hadrien Mendonca, senior technical analyst at IIFL Divis Laboratories: Buy| Target: Rs 1,220| Stop Loss: Rs 1,070
Divis Labs looks promising, our weekly chart analysis indicates that the stock has already broken out from a declining channel which is a positive sign. In addition, the breakout has also been accompanied with a smart uptick in traded volumes.
Smaller time frame chart further has observed a Cup and Handle pattern breakout. The projections of the breakout indicate stock has the potential of rallying towards its potential target of Rs 1,220 levels in the medium term. Crucial support is seen around Rs 1,070 levels.
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