The benchmark indices have now hit a six-month low on sustained selling pressure from Foreign Portfolio Investors. In fact, rising US bond yields and fears of an interest rate hike in the US has pushed indices to such lows. Recently, the government withdrew Rs 500 and Rs 1,000 notes also called de-monetization. Here are stocks that will benefit from de-monetization.
India's largest lender State Bank of India is most probably the biggest beneficiary from the deposit rush driven by demonetization as it'll significantly reduce the cost of funds. With 18 per cent share of bank deposits, which is expected to increase now, after the demonetization tremors calm down, it may lead to increase in SBI's investment book, which mainly consists of government bonds at a time when yields are falling, resulting in treasury gains.
The quarterly numbers of the bank have also been good.
Sun Pharma share price had almost halved from its peak in April 2015. The current price factors in most of the negatives. Sun Pharmaceutical has said it is anticipating 8-10 per cent revenue growth this financial year. Also, there could be triggers such as US clearance for its Halol facility and development in the US business from limited competition specialty products. These and an escalating US dollar make it a good bet. Sun Pharma is also the top 500 recommendation by Dynamic Levels for the quarter.
Gillette is yet another top 500 recommendation by Dynamic Levels for the quarter. The company is unlikely to see much influence from the current cash situation. Gillette share price is down 25 per cent from its all-time high and with the recent correction, at a 5-year low price-to-earnings (P/E) multiple. On a yearly basis, Gillette has seen margins improving and strong earnings growth. The stock has given 100% returns once in every three years since 2009.
The company, which sells pumps and farm equipment, is witnessing a rapid rise in exports of around 23 per cent quarter on quarter and 44 per cent year on year in the September quarter. Exports account for almost half the revenue and will keep on to growing given its Japanese parent is increasing its manufacturing base in India. A good bet at the current market price, according to Dynamic Levels.
J KUMAR INFRAPROJECTS
With more money with the government, the infrastructure space is likely to get a boost. J Kumar is one of the very few infra companies with a debt-free balance sheet. This will let it bid for more projects. Although in past two trading sessions J Kumar share price has taken the hit, yet it is expected to bounce back significantly. J Kumar has strong fundamentals and hence is quoted as the top 500 performing stock for the quarter by Dynamic Levels.
Technocraft is yet another top 500 recommendation by Dynamic Levels for the quarter. Its businesses of drum closure, scaffolding and textile are export-oriented. Its scaffolding business has acquired approvals to operate in the US and Europe. The US accounts have now more than 35 per cent of this business compared with 10 per cent last year. With President elect Donald Trump's plan to invest $1 trillion in infrastructure, Technocrat will be one Indian company to watch out for.
The contents of the article is sourced from the research report of Dynamic Levels with due permission. Dynamic Levels is a website owned by Dynamic Equities Pvt Limited, a member of BSE and NSE. The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. The author and his family do not own any shares in the above mentioned stocks.