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All might not be well for D-Street post Q3; 9 lucky stocks to bet on

Can we say all is well? Maybe not! The December quarter earnings were better than estimates, but that could also be due to a low base effect.

Last Updated: Feb 19, 2017, 10.40 AM IST|Original: Feb 19, 2017, 10.33 AM IST
The DeMon or demonetisation could show its ugly face in March quarter results.
The DeMon or demonetisation could show its ugly face in March quarter results.
NEW DELHI: Earning is a big factor which can influence stock prices. The fear which clouded Indian markets in the name of demonetisation and Trumponomics seems to have receded.

Can we say all is well? Maybe not! The December quarter earnings were better than estimates, but that could also be due to a low base effect. The DeMon or demonetisation could show its ugly face in March quarter results.

The recent run-up in the Indian market may not sustain without better support from earnings and fundamentals. “The December quarter saw a strong recovery in earnings from a very low base in several sectors but underlying trends continue to be subdued with demonetisation adding to the woes," Kotak Institutional Equities said in a note.

"Indian market's rich multiples may not find much support from global or domestic interest rates. The recent rally in EMs may have largely been driven by dollar’s weakness, but global economic data suggests continued economic recovery, which will likely result in higher global yields," it said.

The December quarter adjusted net profits of Sensex and Nifty50 stocks increased 0.8 per cent and 10.2 per cent. The divergence reflects the losses of BoB, which is part of the Nifty-50 Index, but not of BSE-30 Index, in 3QFY16.

“We model FY2018 and FY2019 net profits of the Nifty50 to grow 20 per cent and 16 per cent, driven by improved fundamentals for banks and higher global commodity prices for metal and oil & gas companies," said the Kotak report.

SMC Global collated a list of top 9 stocks which are looking attractive to investors for the long-term post-December quarter results:

Hindalco: Support: Rs 170-150| Resistance: Rs 225-245

Hindalco Industries, an Aditya Birla Group company, has reported a net profit of Rs 321 crore in the December quarter against a net loss of Rs 33 crore in the same period last year.

A sharp increase in aluminium realisation and tight control on expenses helped the company post a better performance, despite weak demand for copper and lower by-product realisations.

Siemens: Support: Rs 1,125-1,050| Resistance: Rs 1,350-1,450

As per the management of the company, its revenue growth comes out of its backlog; growth in volumes comes from small and medium sized orders primarily in the railways and energy transmission segment. Moreover, the growth of the company would depend on large public tenders in these segments.

Dewan Housing Finance: Support: Rs 280-250| Resistance: Rs 340-360

During the quarter ended December 2016, the company has maintained the net interest margin (NIM) target of 2.95-3.05 per cent, despite the expectation of a decline in loan yield of 14-15 in Q4FY2017.

The decline in the cost of funds is expected to support margins of the company. The company has targeted loan growth in the range of 16-18 per cent. The proportion of project finance portfolio is expected to increase to 14-15 per cent from existing 11.5 per cent in Q3FY17.

Motherson Sumi: Support: Rs 320-300| Resistance: Rs 390-425

Auto component maker Motherson Sumi Systems has reported a 28.24 per cent increase in consolidated net profit at Rs 547.32 crore in the third quarter ended December.

The company has shown exemplary growth in all areas and has achieved highest-ever revenues and margins in a quarter.

Power Grid Corporation: Support: 185-175| Resistance: Rs 230-250

For the quarter ended December 16, net sales of Power Grid stood at Rs 6629.76 crore up by 23 per cent on a year-on-year (YoY) basis. Net revenue from transmission business, which constitutes around 95 per cent of total revenue, was up 22 per cent to Rs 6,206.84 crore.

The company maintained the capital expenditure (capex) momentum despite the slowdown in the broader economy.

Indian Oil Corporation: Support: 345-310| Resistance: 420-450

Indian Oil posted a net profit of Rs 15,386 crore for the nine months ended 31st December 2016 as compared to net profit of Rs 9,236 crore during the corresponding period of the previous year.

The company expects to ramp up capacity utilisation of Paradip refinery to 95 per cent by the FY17 end. The company has capex plans of Rs 19,600 crore for FY'18 and Rs 25,000 crore for FY19.

Engineers India: Support: Rs 130-105| Resistance: Rs 175-205

During Q3FY17, it has registered 28 per cent growth in its net profit to Rs 84.28 crore while its sales for the period was lower by 12 per cent to Rs 325.01 crore. Strong growth at bottom-line despite lower sales is largely due to 1,180 bps jump in operating profit margin to 24.9 per cent which wiped out the impact of lower sales and facilitated strong 68 per cent growth in operating profit to Rs 80.91 crore.

Moreover, it has a healthy balance sheet with strong cash balance and its order inflows have improved in the last one-two years. The company has a healthy mix of domestic and overseas orders.

GAIL India: Support: Rs 425-380| Resistance: Rs 560-580

State-owned gas utility GAIL India reported 46 per cent rise in its third-quarter net profit on the back of turnaround in petrochemical business.

The company also registered growth in physical performance in all segments - petrochemical sales were up by 8 per cent, liquid hydrocarbon by 4 per cent and natural gas marketing and transmission volumes were up by 3 per cent and 2 per cent respectively.

Granules India: Support: 110-85| Resistance: Rs 160-180

On a consolidated basis, Granules India's net profit rose 33.8 per cent to Rs 39.06 crore on 10.6 per cent growth in net sales to Rs 359.24 crore in Q3 December 2016 over Q3 December 2015.

The company is aggressively pursuing completion of active pharmaceutical ingredients (API) and pharmaceutical formulation intermediates (PFI) expansion plans and the introduction of new products following appropriate filings strategy.

(Views and recommendations given in this section are the analysts' own and do not represent those of Please consult your financial adviser before taking any position in the stock/s mentioned.)

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