Intra-week volatility expected
After three weeks of consolidation markets witnessed decent rebound. The previous week started on strong note with mid-week volatility giving way to higher stock prices towards the end. Better than expected earnings announcements coupled with hopes that the Fed won’t hike interest rates in June helped the markets to move higher. Traders were also anticipating that RBI may slash the key policy rate in the upcoming monetary policy review on June 2, 2015. By the end both the benchmarks garnered gains of over 2 per cent for the week.
We are now in the last leg of earning season and names like Bhel, Tata Motors, Tech Mahindra, GAIL, Coal India, Hindalco, ONGC, IOC, BPCL, HPCL, NTPC, Sunpharma, M&M andCipla will announce their quarterly results in the coming week.
Progress of the monsoon will also be closely watched as it critical for current economic progression. The southwest monsoon has reportedly further advanced and arrived over Sri Lanka. As per IMD report, it will hit the Kerala coast around 30 May 2015.
Despite recent recovery in indices we have been reiterating our cautious view for last one week or so and extending the same for next week as well. Lack of broader participation is one of key reason for prevailing uncertainty in the market and due to ongoing earning season, this bias may prolong further. Besides, derivative expiry of May month contract would add to the volatility. So traders are advised to continue with stock specific trading approach and avoid overleveraging.
For the prevailing recovery to extend, Nifty should uphold above 8500 mark decisively otherwise profit taking will set in. On downside, 8300-8350 zone holds immediate cushion.
Jayant Manglik, Religare Securities
Strong brand image
Cera delivered splendid performance over the years. Revenue is been growing at 33.8 per cent since 2010 while PAT 28.1 per cent. Previous financial year was challenging to the company because of slowdown in real estate. But the company could deliver robust performance due to revenue flowing from new business verticals like faucet ware and tiles. All three verticals contributed favorably to the bottomline. Cera revenues occur from sanitary ware and allied products (67 per cent), faucet ware (17 per cent), tiles (12 per cent) and wellness products (3 per cent.) The current year is going to be tough for growth but the company is confident of revenues growing by 20-25 per cent over the next three years. Cera’s strength is its strong brand image and vast distribution network. It has 1,400 distributors and 14,000 retailers and has 23 per cent market share in sanitary ware market. The company is recently expanded capacity and plans for further expansion which will keep growth plans running. The government’s thrust on sanitation and housing will provide boost to long term growth. Reliance Securities
The logistics boom that is ongoing for past few years will continue in future. The company’s last quarter results were up to the mark and 30 percent growth rate is possible. The stock has corrected from its top. So this is a good entry opportunity. If somebody holds this stock for a period of one year, a target of Rs 115-116 is very well possible. Anand Rathi
Manappuram Finance business growth is been reviving since the start of 2014-15. The supporting factors being stable gold prices and branch activation efforts implemented by the company. The quarterly disbursements are on the uptrend. The company has large underutilized network of 3,300 branches. Asset growth recovery in the longer term will be driven by introduction of new products such as microfinance, affordable housing and vehicle finance. This would also lend the much needed diversification to the business model. Net interest margins have been surprisingly robust and the company is smartly managed to improve spreads over the past six quarters. Currently, the spreads earned are above 13 per cent, the best amongst NBFCs. MFL has been reducing its blended funding cost by resorting to relatively lower costing borrowings from banks and mutual funds. With cost of funds set to decline further, the company should be able to sustain spreads in future. The valuations are attractive, gross NPAs have decreased and the capitalization is robust. India Infoline