Modi 365: Top ten stocks on Nifty which have risen over 50% in past 1 year

NEW DELHI: The 50-share Nifty, having pared gains made in the last one year, may be up just about 15 per cent, but more than ten on the index have risen over 50 per cent since Narendra Modi took over as prime minister.

Indian markets have experienced extreme volatility in the recent past, and Nifty is down by a little over 7 per cent from its record high of 9119.20. But, analysts on Dalal Street advise investors not to get worried, as corrections are part of every bull market and the long-term uptrend still remains intact.

Stocks which have registered the massive gains of over 50% include Lupin (87%), Cipla (73%), Sun Pharma (73.03%), Maruti Suzuki (63%), Dr Reddy's Laboratories (58%), Yes Bank (55%), Kotak Bank (55.29%), Axis Bank (54%), HUL (53.45%) and Tech Mahindra (52.6%).

Cleary, pharma, auto, banks and capital goods stocks have been able to outperform markets, while realty and metals have disappointed.

The S&P Healthcare Index is up nearly 70 per cent, followed by the BSE Auto index, which has risen nearly 32 per cent and the BSE Banking index up nearly 21 per cent over the last one year.

The laggards have been the BSE Realty Index and the BSE Metal Index. The two indices have plunged over 20 per cent each in the same period.


Both global as well as domestic factors have weighed on sentiment. The economy continues to remain sluggish, and earnings growth in the quarter ended Dec 31, 2014 was the weakest in 20 quarters.

"It has been nearly a year of Modi government and the stock market seems to be losing a bit of faith in the ability of the government to accelerate reforms. We attribute this partly to unrealistic expectations of investors," BofA-ML said in a report.

"With earnings being sluggish, as anticipated by us, markets would give a flat-to-slightly negative return for the majority of the year. With a -1.5% YTD return, the markets seems to be playing to that script," added the report.

BofA-ML sees earnings improving only in late 2015 and stock market returns being back-ended with a flat-to-slightly phase in Q2 and Q3 CY2015.

Market participants are also losing confidence on concerns over retrospective taxes (MAT) and the slow pace of land acquisition reforms, even as global factors weigh.

"Overseas investors have pulled out more than Rs 14,000 crore ($2.3 billion) from the Indian capital markets since the beginning of the month (May) amid continued taxation worries," PTI reported.

FPI investments in January this year stood at Rs 33,688 crore, before dropping to Rs 24,564 crore in February, Rs 20,723 crore in March and Rs 15,266 crore in April, added the report.

The huge sell-off comes amid worries over imposition of 20 per cent minimum alternate tax on capital gains made by overseas investors till April 1, 2015. However, the government on May 11 put on hold issuance of fresh notices and any further assessments on levy of this tax on such entities.

"The uptrend is very much intact, it is just that we are probably doing some kind of corrections or reversals of the strong upmove," says Nilesh Shah, MD & CEO, Envision Capital.

"It is purely course-correction and I still think that the uptrend is pretty much intact. I clearly see the double- digit earnings growth is probably closer, and I clearly believe that the next three to five years are going to be very very exciting times," he adds.

Long term story intact; Nifty could scale up to 11000:

Although some of the foreign brokerage firms have scaled down their Sensex and Nifty target for the calendar year 2015, they see Nifty rallying to fresh record high in the next 12 months to 11000.

Citigroup, UBS and HSBC are some of the foreign brokerages that have trimmed their Sensex and Nifty targets for the year 2015, owing to concerns about poor corporate performance, growing fears related to a weak monsoon, and other markets looking more attractive.

Citigroup has reduced the Sensex target to 32,000 from 33,000 for December. UBS cut the Nifty target to 9,200 from 9,600 and HSBC reduced the Sensex target to 26,900 from 30,100 by the year end.

The ongoing year has turned out to be very different from the previous one for Indian investors. But, Citigroup sees upside in the next 12 months for India markets. They have introduced a June 2016 target of 35,000 for Sensex. The equivalent Nifty targets are 9,760 for December 2015 and 10,600 for June 2016.

"With rates set to drop further, India could justifiably trade at higher multiples. Citi has raised its market target multiple from 16x to 17x - a slight premium over its longer-term average multiple," said the report.

With the recent 10 per cent correction from record high, most experts have started building long position on both Sensex and Nifty as the uptrend still remains intact. Although the benchmark indices might not gain much in calendar year 2015, 2016 can be a different story.

Experts feel that the next big trigger for markets will be the Reserve Bank of India's (RBI) policy meet, scheduled for June 2.

"Post the correction from 9000 odd levels, we regrouped, we re-thought, and started bidding on the long positions at around 8200 levels, going up to 8100 levels," says Vaibhav Sanghavi, MD, Ambit Capital.

"We are tactical long on auto, pharma, and consumer discretionary along with industrials. The bigger picture for the next 16 to 18 months is -- if the Nifty is currently at about 8400, we project Nifty going to about 11000," he adds.

Now that is a pretty aggressive target, according to Sanghavi, but he says that we are very comfortable with that and in that light, there are some parameters like interest rates where we think in the next 12 months, we may see a reduction of about 75 to 100 bps and in terms of the earnings, we are projecting an earnings growth of about 14% to 15% in FY16, which can shoot up to 21% to 22% in FY17.

Last week, British brokerage Barclays maintained its 12-month Nifty target of 10,219, saying the government is on course to delivering the required reforms which will push the markets in the medium term.