The market has been moving in a very narrow range and the earlier levels are not sustaining, What is your call on the market, particularly Nifty?
Everyone should remain very cautious now as the selling pressure is quite visible from the higher side. Europe and US markets are making new highs but India is witnessing profit booking. The US Fed statement on not changing interest rates now has brought some kind of stability here but as bond yields have increased, in the short-term, money is exiting from the markets.
In March, retail participation is more towards the ELSS or the tax saving schemes and as we also have the euphoria of IPOs in the market, the participation from the retail side has shifted a bit to that side. Liquidity is visibly low right now and markets in short term will be witnessing sell on rise until the market stabilises completely. Nifty has a strong support at 14,700 level and if it crosses this level, then the next support is placed at 14,500 and then 14,400. Similarly, in the upper direction, 14,920 is a strong hurdle point. If we get a crossover, it will take to 15,050 and 15,200.
Yes that is correct. The IPO market is very active. You have chosen Suryoday. Why do you like that one?
This particular IPO has the objective of augmenting the bank’s tier I capital to meet its future capital requirements. The deposit growth of this SFB is the highest at around 95% CAGR in the last three financial years and the retail deposit composition is the second highest in the industry at 72%.
Adding to that cost to income ratio gives a clear view of how efficiently the bank is being run. The lower the ratio, the more profitable is the bank which shows a positive structure. The data says that 47% is the cost to income ratio for FY2020 which makes it very lucrative. As India’s economy is on a growth path, this sector will lead to a good growth trajectory. My advice will be to subscribe here for long-term gains. Although I am not expecting higher listing gains but definitely thumbs up for long-term investment.
Your next choice is Motilal Oswal and your target is Rs 1,000. Why do you like that particular stock and what kind of returns can investors make in the medium and long term?
This company is mostly dealing in the financial segment of the market — broking, lending and insurance. In the March quarter of financial year 2021, the company is expected to post the highest-ever operating profit and net profit as well. The all-time high for the stock was around Rs 1,600 levels back in 2018 and currently it is available near Rs 660. These levels are quite comfortable in terms of valuations. My advice would be to buy at the current market price and to accumulate on dips with a target of Rs 1,000 and stop loss at Rs 600.
Your last stock is actually Likhitha Infra. It is a small cap and the volumes are slightly on the lower side. Why do you like that stock?
Although the volumes are on the lower side, this company has major focus on gas infrastructure. This is a debt-free company. Quarter on quarter performance has been great and the company has a large order book. Prime Minister Narendra Modi has also said that the government will focus on oil and gas infra in the country and developing gas pipelines which brings the opportunity to Likhitha Infra as it is the gas infrastructure listed company in the market.
The IPO of this company was recently launched and the stock has been giving good performance till now and has the potential to grow more. My advice would be to buy at the current levels and also accumulate on the lower side and on declines with the target of Rs 425 and a stop loss at Rs 280 for six months.
