Indian markets hit its 52-week high of 18,442 in intra-day deals today, extending gains for the second straight session. This comes on the back of consolidating inflation, rising FII flows, improved economic outlook and a steady decline of the dollar index.
"The Nifty is moving to record highs pushed by the momentum in the market. The global macro construct with a steady decline in the dollar index favours the continuation of the rising FII flows. The possibility of a hard landing for the US economy is receding. This can support the revival of interest in IT stocks. With the Bank Nifty at record highs and strong, these two segments have the potential to take the market higher," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The index has already surged over 21 percent from its 52-week low of 15,183, hit in June 2022. On a YTD basis, the benchmark has gained over 6 percent, meanwhile, it has also turned positive for the last 1 year and is up nearly 2.5 percent.
In the last 1 month also, the index has rallied over 7 percent. It has advanced around 2.5 percent in November so far following a 5.3 percent jump in October.
The gains in the Nifty index have been led by overall positive market sentiment and good performance of various stocks.
In the Nifty500 index, 9 stocks have given over 30 percent returns in the last 1 month while 3 of them have jumped over 50 percent each.
Rail Vikas Nigam has rallied the most, up 72 percent just in the last 1 month. The scrip has risen 59 percent just in November so far following a 19 percent rise in October. It has given positive returns 5 straight months since July. The stock has soared 84 percent in 2022 YTD and 63 percent in the last 1 year.
RVNL’s major client is the Indian Railways and other clients include various central and state government ministries, departments, and public sector undertakings.
Brokerage house HDFC Securities HDFC Sec recommends investors to buy the stock at ₹36.8 and add more on dips at ₹32.75 for a target price of ₹42.2. As per the brokerage, RVNL has an asset-light business model, which helps keep its fixed assets lower, enabling it to keep its balance sheet stress free, and resulting in lower inventory days. Its experienced management and execution teams give it a competitive advantage, said the brokerage.
HDFC further pointed out that the company has a robust balance sheet and is available at an attractive dividend yield of 5 percent. The execution of larger projects on a low base could propel growth higher in coming years, it added. Looking at the strong prospects, HDFC believes the stock is available at a reasonable valuation.
Bank of India is the second on the list. It has jumped over 61 percent in the last 1 month. The scrip has risen 25 percent just in November so far following a 25 percent rise in October. The stock has added 21 percent in the last 1 year and 46 percent in 2022 YTD.
Bank of India’s net profit declined 8.65 percent year-on-year (YoY) to ₹960 crore in the July-September quarter Q2F23 but rose 71 percent QoQ. Its net interest income improved 44 percent YoY to ₹5,083 crore for Q2FY23, against ₹3,523 crore a year ago. On a sequential basis, it increased 25 percent, from ₹4,072 crore in Q1FY23. Its net interest margin improved 62 basis points (bps) to 3.04 percent in Q2FY23, against 2.42 percent a year ago. It improved 49 bps on a sequential basis, from 2.55 percent in Q1FY23.
Union Bank of India has given the third highest returns in the NSE500 index in the last 1 month. The stock has risen over 54 percent in this period. The scrip has added 23 percent in November so far following a 21 percent jump in October. It has been in the green for 5 straight months since July. The stock has gained over 30 percent in the last 1 year and 53 percent in 2022 YTD.
"Union Bank Of India reported a healthy Q2FY23, with the earnings beat driven by healthy NII and other income and tax reversals, though provisioning remained elevated. Fresh slippages are significantly moderated on a sequential basis. This, coupled with a low SMA book (0.57%) and controlled restructuring (2.6%), provides a better outlook on asset quality. Loan growth has picked up and was aided by all segments: Corporate, Agri, Retail, and MSME," said Motilal Oswal in a report.
It revised the FY23 PAT estimate by 14 percent driven by higher NII and other income and lower tax expense, offset by elevated provisioning. It has a Buy rating, with a Target Price of ₹65.
While the above-mentioned stocks surged over 50 percent in the last 1 month, stocks including Indian Bank (42 percent), Mazagon Dock (37 percent), Canara Bank (36 percent), Godfrey Phillips (34 percent), Amara Raja Batteries (30.5 percent), and Jindal Stainless (30.5 percent) rallied over 30 percent each.
Meanwhile, 11 stocks from the benchmark Nifty50 also gave double-digit returns in the last 1 month helping the index hit its 52-week high. Adani Enterprises jumped 26 percent in this period, followed by Adani Ports, which rose 16 percent, and HDFC and SBI, which added 14 percent each.
HDFC Bank, Hindalco, UPL, UltraTech Cement, ONGC, JSW Steel and HCL Tech also advanced over 10 percent each in this period.
Going ahead, Vijayakumar noted that post hitting the 52-week high, profit booking and correction in Nifty is likely. "Since the drivers of the current rally are high-quality large-caps, particularly in banking and IT, mid and small-caps are unlikely to participate in the ongoing rally. Investors may stick with quality," he advised.
|NSE500 Stocks||1-month returns (%)|
|Rail Vikas Nigam||72|
|Bank of India||61|
|Union Bank of India||54|