Dear Customers, We wish you a happy and prosperous Diwali & Samvat 2078………!
When Samvat 2077 started, people believed that the March-April 2020 period would be the best time to invest as the market hit a multi-year low in March 2020. Similarly, many might now be thinking that last Diwali (Samvat 2077) was the best time to invest, when the market had a fresh breakout above 12,400 and started trending into uncharted territory.
The Indian benchmark index Nifty50 registered a new all-time high and gained more than 50% between November 01, 2020 and October 31, 2021. It was one of the best outperforming markets worldwide in the last 12 months. Also, sectoral indices like CNXMETAL and CNXREALTY outpe formed and gained more than 100% in the same period. Although, some sectors like CNXPHARMA and CNXFMCG underperformed. Here is a performance chart of India’s major sectoral indices.
In the last 12 months, there have been many factors that helped the market substantially. Improved liquidity, greater foreign investment, government-led measures to incentivize manufacturing sectors to transition into a global supply chain hub in future, improvement in consumption, buoyancy in corpo rate earnings growth, and recovery in sectors such as metal and realty were the major factors that helped accelerate market growth during the year. Apart from these factors, mass vaccinations and “there is no alternative”(TINA factor) asset class for attractive investment also played crucial roles.
Though the Indian benchmark index is trending into a secular bull run, the current trend as well as market valuations seem stretched at the current juncture. However, the market may gain further from here and touch 20,000 levels by the end of December 2022. Hence, we advise our subscribers to follow the buy-on-dip strategy in the coming months. Sectors like realty, metal, IT, and auto look quite promising for the next few months and year(s).
There can be multiple growth ideas that arise if the market remains in a Confirmed Uptrend. We would thus advise traders/investors to invest in quality companies for long-term wealth creation. Here, we would like to showcase a few stocks as our Diwali picks for Samvat 2078.
TVS Motor manufactures and sells two-wheeler and three-wheeler automotive vehicles and compo nents, spare parts, and accessories, in addition to providing financial services. It has operating revenue of Rs 23,399.57 crore and net profit of Rs 885.61 crore on a trailing 12-month basis. The company reported excellent performance in the last four quarters with regard to the top and bottom line and is also expected to do well in the upcoming quarters through to FY22 and FY23. Apart from the fundamentals, the stock also looks quite attractive from a technical perspective.
The stock made a high at around INR 800 levels in January 2018, after which it went into correction and hit bottom at INR 240 in April 2020. Thereafter, it rebounded sharply and retraced 78.6% of the entire fall recorded in 2018–2020.
TVS Motor gained over 17% in October and formed a large bullish candle on the monthly chart. Momentum indicator the 14-period RSI on monthly chart has now turned positive along with MACD and is comfortably trading above the zero line.
On the weekly chart, stock has been trading in a 23-week-long cup pattern. Also, the stock has given a trendline breakout from December 2017 to June 2021. Furthermore, the momentum indicator, the 14-period RSI on the weekly chart trending in a positive zone along with MACD is now trading above the zero line.
The stock is trending above all key moving averages on multi-time frame charts. Currently, this stock is placed around 16.84% above its 50-DMA and 12.76% above its 200-DMA.
Page Industries Ltd. manufactures, distributes, and markets innerwear, leisurewear, sportswear, and swimwear for men, women, and children. The company had good top-line and bottom-line figures in the last three quarters and growth has rebounded sharply after the COVID-19 outbreak. The company has a good pre-tax margin of 16% and ROE of 38%. It is almost debt-free. Institutional holdings of the stock have also increased. Furthermore, the stock displays the following technical indications:
The stock has given a breakout on the monthly chart and is trading at an all-time high. It formed a large bullish candle on the monthly chart on above average volume. Momentum indicator the 14-period RSI is trending upward in a bullish zone, along with ADX and MACD.
On the weekly chart, stock already had a breakout in the first week of October from an upward wedge pattern. Currently, it is trading sideways, well above its breakout level. Simultaneously, momentum indicator the 14-period RSI has had a breakout and is currently trending sideways. Furthermore, MACD and ADX are also trending upward.
The stock is trending well above its key moving averages on the multi-timeframe chart. Currently, this index is placed around 11% above its 50-DMA and 21% above its 200-DMA.
Ashok Leyland Ltd. is a manufacturer of commercial vehicles. It operates through the commercial vehi cle and financial service business segments. Its products include buses, trucks, light vehicles, defense vehicles, and power solutions. The company has been underperforming since the last two years, reporting a deceleration in top-line and bottom-line growth. However, since the last two quarters, the company has posted a strong set of numbers along with improvement in margin. The turnaround story is visible as institutional sponsorship has also improved in the last four quarters.
The stock made high at around INR 167 levels in May 2018, after which it went into correction and hit bottom at INR 33 in March 2020. The stock rebounded sharply from its multi-year low and gained 78.6% on retracement.
It has had a breakout on the monthly chart from the consolidation zone of INR 105–140 and formed a bullish candle with a higher-high, higher-low price formation. Momentum indicator RSI is also trend ing in a bullish zone with MACD trending well above the zero line.
On the weekly chart, the stock broke out from the “Ascending Triangle” pattern on the closing basis in the first week of October on above average volume. Simultaneously, momentum indicator the 14-pe riod RSI on weekly chart trending given a breakout and is currently trending sideways. Furthermore, MACD and ADX are also trending upward.
After breakout, the stock has retested its breakout level a couple of times and is currently trading side ways with positive bias.
The stock is trending well above its key moving averages on the multi-timeframe chart. Currently, this index is placed around 9% above its 50-DMA and 14% above its 200-DMA.
Dr. Reddy’s Laboratories Ltd. manufactures and markets pharmaceutical products. It operates through the following segments: global generics, pharmaceutical services and active ingredients, proprietary products, and others. It has operating revenue of Rs 20,442.10 crore on a trailing 12-month basis. It has annual revenue growth of 7%, pre-tax margin of 15%, and ROE of 11%. The company has a reasonable debt-to-equity ratio of 4%, which indicates a healthy balance sheet.
The stock made a high at around INR 4,387 levels in October 2015, after which it went into correction for almost five years and hit bottom at INR 1,887 in March 2020. Thereafter, it rebounded sharply and reclaimed its previous all-time high and is currently trading comfortably above that level.
On the monthly and weekly charts, after the phenomenal move of 2.5x, the stock has been trading in a broad consolidation zone of INR 4,100–5,600 levels. Momentum indicator the 14-period RSI is trending downward on the monthly timeframe chart, but sideways on the weekly timeframe chart. Furthermore, MACD is also currently trading on a downward slope below the central line.
The stock is trending well above its key moving averages on the multi-timeframe chart. Currently, this index is placed around -0.67% above its 50-DMA and -2.18% above its 200-DMA.
From now onward, bias would remain positive until the stock holds above 4,500–4,400 levels.
ICICI Bank Ltd. engages in banking and financial services, including retail banking, wholesale banking, corporate banking, and treasury operations. ICICI Bank has an operating revenue of Rs. 162,412.83 Cr. on a trailing 12-month basis. Annual revenue growth of 8%, a pretax margin of 16%, and ROE of 11%. The bank has been posting excellent bottom-line growth from the last couple of years, and fund ownership is also increasing on a q/q basis.
The stock made a high around INR 550 in January 2020; subsequently, it corrected and sharply fell toward INR 268 in March 2020. The stock witnessed a good recovery later and gained 161.8% retracement level of the entire fall during that period and traded comfortably in monthly as weekly timeframe charts.
ICICI bank has gained over 14% in October and has formed a large bullish candle on the monthly chart. The momentum indicator 14-period RSI has turned positive along with MACD and is now com fortably trading above the zero line.
On the weekly chart, the stock broke out above the trendline connecting the high of February 2021 to August 2021. Simultaneously, the momentum indicator 14-period RSI has given a breakout and is currently trending sideways. Furthermore, MACD and ADX are also trending upwards.
The stock is trending well above its all key moving averages on the multi-timeframe charts. Currently, this index is placed around 10% and 24% above its 50- and 200-DMA, respectively.
Canara Bank engages in commercial banking and financial services. It operates through the following segments: treasury operations, retail banking operations, wholesale banking operations, life insurance operations, and other banking operations. It has an operating revenue of Rs. 95,429.52 Cr. on a trailing 12-month basis. Annual revenue growth of 52% and profit growth of 25% CAGR over the last five years. The company has reported excellent performance in the previous three quarters on top- and bottom-line front and is expected to do well in the coming quarters and FY 2022 & 2023. Shares held by the funds have gained 37% Q-o-Q. Technically, the stock indicates .
The stock has been underperforming for the last 10 years; the stock has been trading in lower low lower high price formation. After touching a low at INR 76, the stock reversed its trend and is currently trading with a higher-high higher-low price formation.
The stock has formed a large bullish candle on the monthly chart, gaining over 24% in October 2021. The momentum indicator 14-period RSI is sloping upward along with MACD, and ADX is positive.
On the weekly chart, it has had a fresh breakout above the downward sloping trendline connecting the highs of March 2021 and May 2021 in the last week of September 2021. Simultaneously, it has formed a cup-with-handle price pattern on the weekly chart and broken out above this pattern. Simultaneously, the momentum indicator 14-period RSI trending given a breakout and currently trending upward slope. Furthermore, MACD and ADX are also trending upward.
The stock is trending well above all its key moving averages on the multi-timeframe charts. Currently, this index is placed around 25% and 38% above its 50- and 200-DMA, respectively.
Larsen & Toubro Infotech offers an extensive range of IT services like application development, main tenance and outsourcing, enterprise solutions, infrastructure management services, testing, digital solutions, and platform-based solutions. It operates through the following segments: Banking, Finan cial Services, and Insurance; Manufacturing; Energy and Utilities; High Tech, Media, and Entertain ment; and CPG, Retail, Pharma, and Others. Larsen & Toubro Infotech has an operating revenue of Rs. 13,651.70 crore on a trailing 12-month basis. Annual revenue growth of 13%, profit growth of 18.23% CAGR over the last five years. The company is debt-free and has a strong balance sheet enabling it to report stable earnings growth across business cycles. The number of funds has increased 4% q/q, which is a positive sign.
The IT sector has been the outperforming sector among all the sectoral indices. During February 2020 and March 2020, the IT sector only fell 33% in the sharp fall.
After it made a low at INR 1,200 levels, the stock has generated over five times the return in the last 17 months. It has generated over 100% return from Samvat 2077 to Samvat 2078.
On the monthly chart, the stock has formed a bullish candle with higher high higher low price forma tion for the last five consecutive months. Simultaneously, 14-period RSI is trending in a bullish zone with a positive MACD crossover.
The stock is trending well above all its key moving averages on the multi-timeframe charts. Currently, this index is placed around 15% and 48% above its 50- and 200-DMA, respectively.
Steel Authority of India Ltd. engages in the manufacture and sale of steel and steel products. It offers flat products such as hot-rolled coils, hot-rolled plates, cold-rolled coils, pipes, and electrical sheets, and long products such as thermomechanical bars and wire rods. It has an operating revenue of Rs. 90,591.63 crore on a trailing 12-month basis. The company has good annual revenue growth of 12%, a healthy pre-tax margin of 10%, fair ROE of 9% but needs improvement. The company has a reasonable debt to equity of 43%, which signals a healthy balance sheet.
The stock has made a high of INR 151 on May 10, then it formed a crest-and-trough-like pattern on the daily chart and hit the low of INR 105 on September 20. During this process, it has corrected around 28% from the all-time high.
The stock has given a trendline breakout on the weekly chart as well as on the daily chart as it has given a gap up opening on November 1, which shows a bullish trend in this particular stock.
The momentum indicator RSI plotted on the daily chart has given a steep rise and is placed at 60. On the weekly chart, RSI is also rising upward and is placed at 56, and on the monthly chart, it is placed at 66.
However, another momentum indicator, MACD, is trading with negative bias on daily, weekly, and monthly charts. Still, it is highly likely to give a positive crossover in the coming days and weeks.
Larsen & Toubro is an Indian multinational engaged in EPC projects, Hi-tech manufacturing, and services. It operates in over 50 countries worldwide. A strong, customer-focused approach and the constant quest for top-class quality have enabled L&T to attain and sustain leadership in its major lines of business for over eight decades. It has an operating revenue of Rs. 147,791.95 crore on a trailing 12-month basis. An annual revenue de-growth of -6% needs improvement, a pre-tax margin of 6% is okay, ROE of 15% is good.
Institutional Investors are also bullish on this counter; there has been an increase of 2.89% in Q2, 2022, as 927 funds hold 77.51 crores of shares.
The stock has broken out of a cup-with-handle on the weekly chart in July and is currently placed around 12% higher from the pivot in 16 weeks.
Technically, the stock is in a bullish trend, and it is trending above all its key moving averages on a multi-timeframe chart with bullish momentum intact.
On the monthly chart, the stock is closing on a positive note from the past seven months, and there is a good accumulation of volume, with strong EPS strength of 94 and buyer demand of B+.
The momentum indicator RSI plotted on the monthly chart is placed at 70, followed by the weekly chart, with RSI placed at 66, and on the daily chart, RSI is placed at 55.
Infosys is a global leader in next-generation digital services and consulting. It enables clients in over 50 countries to navigate their digital transformation. It has an operating revenue of Rs 109,736.00 crore on a trailing 12-month basis. The company's annual revenue growth of 10% is good, a pre-tax margin of 27% is great, ROE of 25% is exceptional. The company is debt-free and has a strong balance sheet enabling it to report stable earnings growth across business cycles. Institutional Investors are also bullish on this counter as there has been an increase of 3.73% in Q2, 2022, as 1,048 funds hold 206.58 crores of shares.
The stock is trading with a positive bias on the weekly chart and monthly chart. However, there was a small correction on the daily chart, and it found support around its 100-DMA today, i.e., November 1.
The stock has given a breakout on July 16 and gained around 15% in the three months from the pivot level.
It has a fair EPS strength of 75, good buyer demand of B, and it has increased the fund holding by 3.73% in the last quarter.
What do you think? Please email us any questions or comments.
Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.For more information, see our Legal disclosures here.