Consumption sector is expected to be in the focus in 2018, due to uptick in rural economy. Recovery in non agri segment of rural economy from demonetisation/GST related disruptions,
possibility of good monsoons and Government thrust on rural economy via increased fiscal allocation towards affordable housing, rural roads and electrification will combine to drive demand.
Recovery in demand is expected to contribute to greater domestic consumption, as demand for two-wheelers, tractors, diesel, consumer non-durables and cash would increase significantly.
Rural Outperformer theme consists of companies from across sectors like tractors, seeds & fertilizers, home electronics etc. which not only derive significant amount of their revenue from rural India, but are also striving to enhance their foothold across rural markets and are likely to benefit due to increasing rural demand. The theme has returned 71.61% over the last 1 year!
Realty Demystified was one of the best performing themes last week - generating a weekly return of more than 4%. On the back of multiple positives like passing of RERA and increased activity of large PE players, realty sector has been performing handsomely for the last one year. This theme has generated a return of more than 120% in the last one year!
In spite of the recent euphoria over recapitalization, private sector banks are expected to
continue grabbing market share by public sector banks. Indicators suggest that macro factors will rebound over
the next 2 years and this in turn should lead to increase in demand for working capital loans. Overall loan growth
is expected to return to mid teens over the next 2 years.
Benefit from this trend by buying Privy Banks theme. It consists of private banks and non banking financial companies, which are at an advantageous position going forward due to their robust business model, low loan loss and high profits. Theme has returned 54.55% over the previous 1 year!
This theme consists of companies experiencing earnings growth, witnessing margin improvement & increasing
return on capital, and still available at justifiable valuations.
The Safal Nivesh portfolio is trading at a discount of 50% to Nifty PE. Also, 6 out of 10 stocks in the theme have been rated either "Strong Buy" or "Buy". These stocks also have a potential upside of 10% and at least 10% institutional holding. High institutional holding indicates good management quality, favorable performance track record and expectation of bullish performance going forward. The theme has gained 4.34% over the previous week and gained 69.63% over the previous 1 year!
After Titan Ltd, last week, reported 67.45% growth in net profit and 29.5% growth in revenue during September
ended quarter, the company's share prices surged 19% on Monday to hit 52 week high. Deutsche Bank forecasted that
the company’s earnings will double by 2018-19 from last year's base. The company is also planning to open 15 more
jewellery stores during the year.
Luggage maker VIP Industries reported 8.6% growth in revenue, 38.4% growth in earnings before interest, taxes and depreciation and 27% growth in profit for September ending quarter.
These companies are part of Affluent Stocks theme. This theme consists of stocks expected to benefit from India's increasing affinity for luxury goods and services. It has generated a return of 74.32% in last one year!
Sales volumes of fast moving consumer goods (FMCG) companies have seen an uptrend this quarter compared to
low volume growth seen in the previous 2 quarters due to the effects of demonetization and GST implementation.
Hindustan Unilever reported a 4% volume growth in the quarter ended September compared to a flat growth in the
June quarter. Dabur India reported a 7.2% volume growth for the recent quarter, compared to a 4.4% decline in
the previous quarter. Godrej Consumer Products reported a 10% volume growth compared to a flat growth in the previous quarter
Markets seem to also recognise this, as counters of FMCG companies are seeing heightened activity. According to Morningstar data, mutual fund houses bought Rs. 1433 crore worth of ITC shares in September which led to over 10% month-on-month increase in their holding. Shares of Dabur India hit 52 week this week after global brokerage firms like Macquire Securities and UBS retained buy rating on the stock
You can participate in the FMCG recovery rally with Indian Shopper theme. It has generated a return of 6.28% in last one month
Suven Life Sciences has been granted a patent by Singapore corresponding to the New Chemical Entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases. The patent is valid till 2033.
Aurobindo Pharma Ltd has received final approval from the US Food & Drug Administration (USFDA) to manufacture Esomeprazole Magnesium Delayed-Release Capsules. The capsules are indicated to treat frequent heartburn. The approved product has an approximate annual sales in excess of $300 million. According to company release the product will be launched immediately. Cadila Healthcare has received final approval from the USFDA to market Allopurinol tablets. The drug is used to treat major depression. These stocks are part of this theme. Portfolio gained 1.7% during the week. 6 out of 8 stocks in the theme have an estimated upside of at least 10%. The sector has been out of flavour for quite some time now and could be ripe for a contra bet.
This theme is trading at a discount of 76.4% to Nifty PE of 23.5x. 10 out of 15 stocks in the theme have a rating of "Strong Buy" or "Buy" by analysts. 7 stocks have at least 10% estimated upside potential. The theme has returned 68.11% over the previous 1 year.
It has been built based on Joel Greenblatt's magic formula investing strategy. This theme comprises of companies which have generated high return on capital employed but are trading at a low valuation. Return on capital employed allows us to understand how many rupees in profit each rupee of capital employed generates. It indicates how efficiently a company uses its capital. The higher the number, the more favourable the situation as it means more profits are generated.
Boosted by festive demand, carmakers reported strong numbers for the month of September. Maruti's sales was up 9%, Tata Motor's 25% and Hyundai's 17%. This theme consists of stocks from segments like auto parts, tyre manufacturers, two wheeler manufacturers and carmakers. With Indian automobile buyers timing their purchases around festive season, this could be a good time to invest in this theme. It has generated a return of 14.5% in last one year.
This year, Deepawali will be celebrated on 18th of October. It is one of the most important festivals in India and also marks the beginning of new financial year in Hinduism with people seeking blessings of goddess Lakshmi, for a prosperous new year.
Deepavali, has a very significant impact on the Indian economy. Indian companies pay bonuses during this time. The Kharif crop season also usually ends by mid-October, bringing money into the rural economy. Also, for the festive shopping people generally save for the whole year. All of these lead to increased economic activity, as the India retail goes on a shopping spree. People spend to buy new clothes and jewellery. Purchase of consumer durable products like fridge, TV, washing machines etc. goes up. Car and two wheeler purchases also sees a spike during this time of the year. This week we have highlighted few themes which are expected to benefit from the increased economic activity during the festive season.
Theme gained 5.47% last week. It is trading at a PE of 6.32, a deep discount of 73.1% to Nifty PE. Also, 11 out of 13 stocks in the smallcase have a buy or strong buy rating.
This theme selects companies which are displaying earnings growth and positive momentum. Momentum is the tendency of stock prices to move in the same direction as the trend, i.e upward trending stocks tend to move higher whereas falling stocks tend to move further downwards. Momentum investing involves chasing performance. Currently, MidCap Star portfolio has a momentum rank of 1 amongst all model based portfolios.
According to data released this week by TRAI, active mobile subscriber base increased by 11.3% since July 2016. July saw a net subscriber addition of 0.1 million - a third straight month of growth. Additionally, mobile broadband subscriber base increased by 96.2%, compared to July 2016.
Last week, in an interview to Economic Times, telecom minister Manoj Shah said that the new telecom policy (expected by Mar'18), will focus on providing affordable internet access to 1.3 billion Indians. You can benefit by digitization trend in Indian by investing with Digitally Yours theme. This theme consists of various companies like data providers, equipment manufacturers and infrastructure enablers working in the data chain and expected to be the beneficiaries of this trend.
This theme gained 5.71% during the past week. It is based on Benjamin Graham's investment philosophy. Graham widely known as the father of value investing believed that inexperienced equity investors should invest into conservatively financed companies with long history of profitable operations. This theme consists of stocks which boast of strong financial position, manageable debt and stable earnings.
The portfolio is currently trading at a PE of 11.7x, discount of 49.3% to Nifty PE. 3 out of 5 stocks in the smallcase are rated as either "Strong Buy". These stocks also have more than 10% institutional holding indicating high management quality, good performance track record and expectation of bullish performance going forward. Theme has generated a return of 53.64% in last one year, as shown in the graph below.
Smart cities was the focus this week, as Prime Minister Narendra Modi, speaking at the BRIC's summit in China, stressed on accelerating cooperation in smart cities, urbanisation and disaster management amongst BRIC nations. Based on the PM's directive, Ministry of housing and urban affairs, the nodal ministry for Smart Cities Mission, this week identified 261 impactful ventures worth Rs 31,000 crore and PPP projects worth Rs 32,000 crore for the states to work on. Focus will be on impactful PPP based smart city projects.
NDA Government launched the "Smart City Mission" with a project outlay of Rs.98,000 crore to revamp and transform 100 cities to the highest level of urbanization. Benefit from this project by buying the Urban India portfolio. The theme has generated a return of more than 40% in last one year, as shown in the graph below.