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You are here: IndiaNotes >> Market Insights - 23 Mar 2016 >> Pair Trade - Buy Coal India and Sell Nifty - IndiaNotes.com Market Insights Newsletter
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Welcome to Market Insights.

Before we begin, we take this opportunity to wish all our readers a Very Happy Holi, the festival of colours. In this edition, we have Mr. Sanjay Chhabria recommending investors to buy Credit Analysis & Research at current levels and adding on dips to ensure returns of 40%-50%. We also have Motilal Oswal recommending Crompton Greaves for a 59% upside potential. At the same time, Firstcall India Equity recommend a high performance specialty chemicals scrip for the mid- to long-term while HDFC Securities recommend a pharma stock for investors willing to keep a time horizon of 2-3 quarters. Lastly, Way2wealth elaborate and justify their Pair Trade, which recommends buying Coal India and selling Nifty.

 

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Credit Analysis & Research: Buy at current levels and add on dips for 40%-50% returns

According to Mr. Sanjay Chhabria, CARE earns decent return ratios, and has huge potential to improve its return ratios significantly. Investors can start accumulating the stock at current levels and add more on dips for decent returns of 40%-50% over next 8-12 months.

Click here to read the detailed analysis by Mr. Sanjay Chhabria...


Firstcall recommend a high performance specialty chemicals scrip
The company is involved in development and manufacture of high performance specialty chemicals for different applications. Expecting that the company surplus scenario is likely to continue for the next three years and will also keep its growth story in the coming quarters also, Firstcall India Equity are recommending it for investors willing to make medium- to long-term investments.

Crompton Greaves: 59% upside potential; Buy
Motilal Oswal are valuing Crompton Greaves on an SOTP basis with the consumer business at INR130 (25x FY18E EPS) and the Industrial businesses at INR70 (15x FY18E EPS). They continue to value the industrial business at 15x its FY18E EPS of INR4.9 and maintain their 'Buy' rating. Key risks to their rating is a slower than expected pick up in the Industrial and Transmission capex.


HDFC Securities recommend a pharma stock with a time horizon of 2-3 quarters
According to HDFC Securities, at the CMP of Rs.343.45, this pharma scrip is trading at 14.4x FY17RE EPS of Rs.23.9 and 11.4x FY18E EPS of Rs 30.2. They think that investors can buy the stock at the CMP and add on dips between Rs. 315-321 band (~10.5x FY18E EPS) for sequential targets based on ~12.5-14x FY18E EPS over the next 2-3 quarters.

Pair Trade - Buy Coal India and Sell Nifty
According to Way2wealth, Coal India and Nifty both are highly correlated to each other and 180 days correlation between the two is around 83%. However, in short term Coal India has underperformed Nifty and due to this price ratio has deviated from its mean. The Strategy entails taking benefit of the price movement of both the stocks and takes advantage of the price ratio reverting to the mean.

Featured Technical Call for today by Bonvista Financial Planners
Buy BATA with stop-loss of 495 and HEROMOTOCORP with stop-loss of 2820
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