Investors can pick up good quality companies with MNC parentage irrespective of how the market is behaving. One of the few gems in a niche sector such as FMCG is Colgate Palmolive India Ltd which continues to ride on its brand equity and distribution reach in a category which is relatively inelastic. Despite intense competition, the company continues to focus on driving cost efficiencies to fuel growth. With lower input costs and product innovations, Colgate has gained market share in both the toothpaste and tooth brush segment by 58% and 42% respectively. The company continues to be the most preferred and trusted brand name across FMCG and the personal care category for the 4th successive year. The Colgate stock is an excellent buy with 6-7 months time horizon for a potential target price of over Rs 2,800, which is a 40% upside from the current levels.
Many fund managers and analysts are also not worried of expensive stock valuations pertaining to good MNC companies as they feel that it would be prudent to buy quality companies than buy cheap stocks. In the mid cap space, Bata India Ltd is one of their top picks as it has got an excellent brand name, impeccable pedigree and good management. A few months back, the Bata stock which was quoting at over Rs 1,400 has corrected by 25% to touch Rs 1,150 at present. The share seems to have found its bottom having consolidated at these levels for a long time and is ripe for an up move. It can go up by 25% back to its January 2015 level of over Rs 1,400 in six months investment horizon.
From a technical perspective, the Fortis Healthcare Ltd stock, currently priced at Rs 185, is a good short term buy with a duration of 2-3 weeks investment. The stock is in an upward momentum and may head towards the Rs 210 levels. Most of the indices across the globe were trading in the negative zone during most of last week. The Indian stock market also extended their downtrend with 4 negative closes among 5 trading sessions. While sentiment was pessimistic as quarterly earnings from some blue chip companies were disappointing, this made traders and investors to book profits in the final session of the week. On a year to date basis, the Indian stock index Nifty has been consolidating in a broad range of 8,000-8,800 owing to possible uptick in corporate earnings, fall in inflation numbers and improved sentiment and pick up in the GDP growth figures. But last week, the CNX Nifty ended at 8,521 down by 68 points and the BSE Sensex closed at 28,123 down by 247 points. In the equity segment, foreign institutional investors were net buyers during the week gone by and hence brokers expect no significant downside in the coming week.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.