The Bulls were in full control with the barometer index, the S&P BSE Sensex moving past the psychological 26,000 mark and the Nifty regaining the 8,000 level during the week. Trading for the week started on a weak note with losses seen in PSU bank stocks, bellwether Infosys and HDFC shares. But an upward revision in monsoon forecast aided the benchmark indices to snap a losing streak and inch higher. Prime Minister Narendra Modi’s comments indicating that further economic reforms along with positive global cues triggered a smart rally in the domestic bourses not seen in the last six months. In the week ended Friday, 27 May 2016, the 30 share S&P BSE Sensex settled at 26,653 levels with the Nifty 50 index closing at 8,156 levels. Construction giant L&T was the top weekly gainer spurting a whopping 17% with India’s largest lender, the State Bank of India, not far behind: jumping 14% and surprising all market men. Foreign brokerage houses in their reports are citing attractive valuations for Indian stocks compared to other emerging markets on the back of strong macroeconomic fundamentals, recovery in earnings growth, prospects for the passage of the goods and services tax (GST) bill, expectation of a good monsoon and the likely easing of interest rates by the RBI in the near future. In the short term, the markets are expected to move higher and consolidate at around Nifty 8,200-8,300 levels giving an opportunity to traders to pare their positions.
We recommended Bharat Petroleum (BPCL) stock a few months back to our esteemed readers and now the company has rewarded its shareholders with an attractive bonus issue of equity shares in the ratio of 1:1. In February-March 2016, the stock was hovering at around Rs 750 and is up 30% to present levels of Rs 975. BPCL has fixed 14 July 2016 as the record date for the bonus issue allotment and portfolio investors can subscribe to the stock for long-term gains.
Infrastructure Development Finance Corporation (IDFC) is India’s leading integrated infra finance player providing end-to-end infra financing and project implementation services. The company operates in a full range of project and corporate finance to asset management (mutual fund and alternatives) and investment banking. The stock had hit an all time low of Rs 35 but has since seen a smart recovery in the last month. The IDFC stock currently trades on the Indian bourses at Rs 49 and is attractively priced at 1.2 times book value of Rs 40. There has been a significant rise in volume activity recently with foreign portfolio investors and traders lapping up the stock after the RBI published draft guidelines for on-tap banking licenses. This may do away with the bank holding company structure and possibly spur parent IDFC to merge with the IDFC Bank in the near future. IDFC shareholders could be the biggest beneficiary in this possible merger. At 1.8 times book in FY17, the IDFC stock can easily appreciate to Rs 75 in six months time horizon. Investors can expect the upward momentum to continue in this stock for some time and can add on to their portfolio.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.