Weekly Newsletter 1 : June

NIFTY 50 Weekly Review:

This week, the market has shown significant volatility with NIFTY 50 varying about 5-10%

Significant volatility can be expected in the coming week.

NIFTY 50 at this price can be a little over-valued with a third COVID wave eminent and with significant decline in the expected profits of almost all companies excluding some sectors.

NIFTY 50 can further decline to the range of 15,000 to 15,200.

With significant support for NIFTY 50 at 15,200 it is highly unlikely for NIFTY 50 to decrease beyond this range.

Our portfolio manager, Aaryan Bhutani had earlier recommended to keep 30-50% of your portfolio in cash when NIFTY was at 15,900.

However, now, we recommend to keep around 15-30% percent of your portfolio in cash as NIFTY has already declined 230 points and there is a potential downside of only 2-3%.

Having said that, if your portfolio has 100% equity shares and you feel that your shares are undervalued or have high potential, then we absolutely recommend you to keep your shares and not to panic as the market sentiment for the next couple of months is highly bullish and short term corrections such as this will absolutely have an inconsequential impact on your portfolio in the long term.

Trading calls for the upcoming week: 

These shares can give an upside of 10-50% within 1 month.

1. Associated Alcohol and Breweries (Short Term)

  • Associated Alcohol and Breweries is a small cap company in the alcohol sector with a market cap of 898 crores.
  • With a current P/E of 15.5 and no debt, it is a highly undervalued company.
  • Apart from this, the government’s has preponed its plan to achieve an ethanol blending target of 20% from 2030 to 2025, which is likely to boost the production and orders for ethanol produced by this company.
  • Associated alcohol and breweries is planning to double its capacity by 2022 and has planned a very ambitious expansion strategy, which can significantly cause its revenue and profits to rise and almost double its share price in the near future.
  • TARGET PRICE : INR 600+ (Current price : INR 497) ; Long term target price of 2 years : approx INR 1000
  • OUR STANCE : BUY

2. Cosmo Films (Short Term)

  • With a P/E of 6.4 and a P/B of 1.7, Cosmo Films is a highly undervalued company which can yield significant returns in the near future with increasing revenue and profits for the past 5 quarters.
  • Having said that, Cosmo Films can give a very high return in a very short period of time.
  • TARGET PRICE : INR 1000+ (Current price : INR 839)
  • OUR STANCE : BUY

3. ICICI Bank (Long Term)

  • ICICI Bank is a well-known and stable company, and a giant in the banking sector.
  • With the current P/E of 23.7, and P/B of 3.7, ICICI Bank is one of the most undervalued companies in the banking sector.
  • This share might not give a very high return percent in the near future, but in the long term, it should be one of the best performing shares in the banking sector.
  • With the current instability and high volatility in the market, it is a very safe share as it will not decrease a lot and will help to stabilise your portfolio.
  • TARGET PRICE : INR 750 (Current price : INR 630)
  • OUR STANCE : BUY

Weekly News 

1. Adani

  • As foretold by our portfolio manager, Aaryan Bhutani on our Instagram page @stockrocketinvesting , Adani’s share have continued to fall this past week with Adani Power falling 18.5%
  • It is further reiterated not to purchase any Adani shares (except Adani puts) as significant share price manipulation has taken place and created a bubble for all these shares. When the bubble bursts, the share prices of the Adani listed companies can plummet up to 80%

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