Stocks to Buy: From pharmaceutical to information and technology, domestic brokerage from Centrum Broking comes out with the top five large-cap company stocks with high conviction to buy in September for an upside of up to 44 per cent on a long-term basis.
According to the brokerage, the Nifty index is forming higher highs and higher lows on the weekly chart indicating bullish sentiment. The momentum indicators and oscillators are in buy mode on the weekly chart with a major hurdle at 18000 and above, Centrum Broking stated.
Below are the five large cap stocks that may give bumper returns:
1) HCL Tech – Buy; Target: Rs 1350; Upside: 44 per cent
HCL Tech is a leading global IT services company, which is ranked amongst the top five Indian IT services companies in terms of revenues. It is engaged in transformational outsourcing, and offers an integrated portfolio of services including software-led IT solutions, engineering and R&D services.
Investment Rationale:
HCL Tech posted decent result in Q1 and has guided that growth momentum may continue in future quarters as well. With some pressure coming in on margins, the coming quarter results should result is margins coming back slowly. The valuations are very attractive with very good dividend yield.
Technical:
The Nifty IT index is in a short-term downtrend and indicating some consolidation which looks like a base formation. HCL Tech is forming a falling wedge pattern where the resistance of the neckline comes to around 1000, while the risk and reward at the current level looks favorable.
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2) HDFC – Buy; Target: Rs 2800/3000; Upside – 23 per cent
HDFC is India’s pioneer housing finance company with over 9 million home units financed. It was founded in 1977 and has over Rs 6.2 trillion of loan assets.
Investment Rationale:
HDFC is a very attractive play in India’s real estate growth story. With lowest interest rates in decade, there is tremendous demand for homes across India and HDFC is the best play in the sector. It has low NPAs as compared to industry average and higher growth rates.
Technical:
HDFC constantly taking support near the rising trend line and witnessing a gradual upmove from the same. The momentum oscillator MACD is giving a buy crossover on the weekly chart from its oversold territory – a positive sign. Buying opportunity as long as it holds the major support of 2050.
3) Dabur – Buy; Target: 650/700; Upside: 20 per cent
Dabur India Limited is the fourth largest FMCG company in India with revenues of over Rs. 9,500 crore & market capitalization of over Rs 100,000 crore. Dabur’s products also have huge presence in the overseas markets and are today available in over 120 countries across the globe.
Investment Rationale:
Dabur has a very strong portfolio of brands which are capable of giving higher than industry growth. Focus on building capabilities, rural penetration and focus on brands can lead to superlative growth in long term.
Technical:
Dabur witnessed a golden crossover where 50-DMA crossed above its 200-DMA on the daily time frame which confirms the bull market. The Nifty FMCG index scaled to all-time highs and hints at positive momentum in the majority of the FMCG stocks. The risk/reward still looks attractive.
4) State Bank of India (SBI) – Buy; Target: 600; Upside: 13 per cent
State Bank of India (SBI) a Fortune 500 company, is a Public Sector Banking and Financial services entity headquartered in Mumbai with a rich heritage and legacy of over 200 years. SBI is the largest Indian Bank with 25% market share in deposits, serves over 44 crore customers.
Investment Rationale:
SBI is trading at lower valuation as compared to its private sector peers. The NPAs are reducing and bank is comfortably placed to participate in upcoming growth opportunities also. It has stakes in listed subsidiaries like SBI Life and SBI Card.
Technical:
The stock is constantly trading in a rising channel and is currently reached near its all-time high levels. The momentum oscillator MACD on the weekly chart gave a buy crossover and indicate momentum in the trend. The counter may move towards new all-time high levels.
5) Sun Pharmaceutical – Buy; Target: Rs 1000; Upside: 12 per cent
Sun Pharma is the fourth largest specialty generic pharmaceutical company in the world with global revenues of over US$ 4.5 billion. Supported by more than 40 manufacturing facilities, it provides high-quality, affordable medicines, trusted by healthcare professionals, in over 100 countries.
Investment Rationale:
Sun Pharma will be a long-term beneficiary of the improved performance of the healthcare sector globally. Sun has been showing improved sales in domestic business and its US business is also showing traction. Debt is reducing and margins are coming back due to cost cutting measures.
Technical:
The stock is constantly trading in a rising channel and expected reached near its all-time high levels. On the weekly chart, it formed a Piercing line candlestick pattern which is a bullish reversal formation. The immediate support is at 800 and can expect the stock to hit new highs in short-term.
