NEW DELHI: The announcement of
Unlock 1.0 may have set domestic stocks on fire on Monday, but the real impact has actually been only on a handful of stocks.
The government decision came amid a stable growth rate in the number of confirmed Covid-19 cases, a sharp rise in the number of recoveries and a low fatality rate over the past weeks.
Analysts said jewellery, retail, hotels and restaurants are the sectors that would benefit the most and see a gradual recovery once they are allowed to resume operations in Phase 1 of the Unlock 1.0 starting June 8.
Decisions on multiplexes, international flights and other recreation activities will be taken in Phase 3, and hence, there is no respite, they said.
“While these relaxations would help improve the supply-side situation and potentially defray fixed costs, it would also drive consumption at the margin. However, demand trends in respective categories will be key monitorables,” said Motilal Institutional Equities.
Consumption indicators have already showed signs of modest improvement in May.
11 money-making ideas for next 4 weeks
Stock picking
1 Jun, 2020
The bulls are having a field day, prancing about on Dalal Street and trying to announce that they are back. However, analysts look at it as nothing but a bear market rally and advise caution. Technical analyst Milan Vaishnav, Founder of Gemstone Equity Research & Advisory Services, said, “While some profit-taking is expected at higher levels, we recommend chasing the up-move with an overly cautious and stock-specific approach.”Based on various brokerage recommendations, here are 10 stocks that can offer solid returns over the next 3-4 weeks:
Glenmark Pharma | BUY | Target Price: Rs 397
1 Jun, 2020
This counter appears to be consolidating in a 40-point range for the last 5 weeks, in the zone of Rs 360-320. Relatively higher volumes around the upper end of this trading range are suggesting that this counter is in for a breakout sooner than later. Hence, in anticipation of such a breakout, positional traders can create long positions with a stop below Rs 340 levels on a closing basis and look for a target of Rs 397.[Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in]
Bata | BUY | Target Price: Rs 1,390
1 Jun, 2020
For the last couple of weeks, this counter appears to be consolidating in a range of Rs 1,390-1,245 levels. The way this counter bounced back from the lower end of the trading range on relatively higher volumes is hinting that slowly it can head towards the upper end of its trading range. Hence, positional traders should buy into this counter and look for a target of Rs 1,390, the analyst said. Stop suggested for the trade is a close below Rs 1,280 levels.[Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in]
Exide Industries | BUY | Target Price: Rs 175
1 Jun, 2020
This counter appears to have emerged out of its recent congestion zone with a decisive breakout on the daily line chart. Hence, sustaining above Rs 157 levels, it can slowly head to test its 200-day moving average whose value is placed around Rs 175 levels. Interestingly, this level also coincides with 62% retracement value of its entire fall from the highs of Rs 208–124. Considering the strong support around Rs 156 levels, positional traders are advised to adopt a two-pronged strategy of buying now and adding further on dips, if any, into the zone of Rs 160-157 and look for a target of Rs 175. Stop suggested for the trade is close below 156.[Analyst: Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in]
Praj Industries | BUY | Target Price: Rs 65
1 Jun, 2020
After showing weakness in the last few weeks, the stock price witnessed an excellent upside bounce in the last week and closed higher. The formation of Doji-type candle patterns in the previous two weeks have coincided with near term bottom reversal in the stock price at Rs 52.50. Volume expanded with the rise in stock price and weekly RSI is currently showing positive indication. Traders can initiate but at current market price, add more on dips down to Rs 56.50 and wait for the upside target of Rs 65 in the next 3-4 weeks. Place a stop loss of Rs 55, the analyst suggested.[Analyst: Nagaraj Shetti, Technical Research Analyst, HDFC securities]
“With the gradual easing of lockdown restrictions under way, electricity demand returned to 2019 levels in the last week of May. With private vehicles returning to the roads in most parts of the country, fuel consumption has started to rise. Still, a rise in deposit holdings in the banking system while credit slumps points to some evidence of higher precautionary savings, along with lower recreational spending,” Barclays said.
As per the Unlock scheme, hotels, restaurants and other hospitality services and shopping malls will be allowed to open first. The opening up of malls will particularly be positive for the retail companies.
“The unlocking will open up avenues to purchase and there will surely be pentup demand in many segments. In the Phase I of Unlocking, we would in fact like to play the retail segment with Reliance Industries. In the case of hotels, there are still restrictions on travel. Besides, this is an off season for the sector and it is early to comment on it,” said Sunil Jain, Head of Equity Research at Nirmal Bang.
Motilal Oswal is positive on Jubilant Foodworks, Titan, Page Industries, ABFRL, Trent, Avenue Supermarts, Phoenix Mills, Brigade Enterprises and Indian Hotels.
Barclays expects the lockdown to last till mid-August and estimates this additional period to see incremental economic losses of $71.5 billion, bringing the total cost of the lockdown to an estimated $306 billion, or 11.5 per cent of GDP.
Kotak Institutional Equities said while the government has allowed unrestricted movement of persons and goods across states, any state wishing to regulate such movements based on internal assessments may do so after communicating widely any such restrictions.
“As such, the government has paved the way for a resumption of normalcy, while prescribing compliance to prescribed safety norms,” it said.
Jain expects makers of small-appliances to see good demand. He is also positive on two-wheeler makers.
Bloomberg consensus Nifty earnings estimates for FY21/FY22 are already down by 18 per cent and 10 per cent since the start of FY20. This, Nomura India noted, is more than full-year earnings downgrades for FY17-FY19. The brokerage has a target 10,200 on the Nifty by March 2021.
